Vietnam lacks legal corridor to control state-owned groups

The current legal corridor for monitoring state-owned business groups cannot keep pace with the development of these conglomerates as they have expanded operations beyond their core areas to almost all economic spheres, experts said on Tuesday.

Scholars and economists at a conference in Hanoi on State-owned groups agreed that all such concerns had been established on the basis of administrative decisions by the Government rather than on market-driven policies. The conference, titled “Research on a model for Vietnamese economic groups till the year 2020,” was organized by the National Economics University on Tuesday in Hanoi.

Prof. Pham Quang Trung, vice president of the university and the team leader in charge of preparing this national-level research, stressed that “State-owned groups were all established by the Government’s administrative decisions.”

Meanwhile, giant foreign conglomerates such as Coca Cola and GE, from whom Vietnam can learn, have developed on the basis of private capital, not on any government’s decision, he added.

Such a situation explains why the legal corridor is not far-reaching enough to govern business activities of State-owned groups, experts said.

The legal base for operations of state-owned groups as well as for monitoring their operations is not specific, sufficient and appropriate, said Le Xuan Ba, director of the Central Institute for Economic Management.

The Prime Minister often issues separate documents on each business groups’ establishment, organization and operation, Ba said. Therefore, these documents cannot become the common legal corridor for all state-owned ones, and cannot be used to manage, monitor and protect the State’s benefits, he said.

Nguyen The Quyen from the Trade College of Vietnam said he was not sure whether conglomerates’ operations are governed by the 2003 Law on State-owned Enterprises or the 2005 Enterprise Law.

Furthermore, it is also popular that the Government also intervenes in corporate issues like capital and assets of conglomerates, or even writes out debts for such groups.

If a state-owned group faces bankruptcy, the group cannot file for bankruptcy without Government permission, as in the case of Vinashin, Quyen added.

Hoang Duc Than from the National Economics University said “it is difficult to distinguish state ownership from state management in state-owned groups.”

There are 12 State-own groups in the country, but there are few statistical reports on capital and assets of these concerns.

A statistics report by Hoang Xuan Hoa, deputy director of the Economy Division of the Central Party Committee Office, shows that State-own groups are holding huge assets of the economy.

The 12 State-owned groups and nearly 90 corporations 90 and 91 – so dubbed because they were established following Decisions 90 and 91 of the Government – are holding 70% of the nation’s fixed assets, 20% of overall invested capital, 60% of bank credits, 50% of State investment, and 70% of ODA funds. However, they create jobs for only 9% of the national workforce, according to the report – SGT

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs