State owned enterprises – when will the children grow up?

Why does Vietnam lack talented staff for state-owned enterprises? The answer lies in the current method for appointing and dismissing personnel.

There are no timely adjustments in human resources, there is no evidence to show who can fulfill their tasks well and who cannot. As the result, only 4-5 percent of managers at state owned enterprises (SOEs) are dismissed because they did not fulfill their duties.

Recommending talented people? It’s impractical

Saigon Tiep Thi quoted Deputy Director of the Enterprise Renovation Department under the Government Office Pham Tuan Anh as saying that one of the present barriers in personnel work is the system under which managers of enterprises are regarded as civil servants, who can be replaced only when they retire or make serious violations.

As the result, a lot of enterprises cannot find and use talented people, because they do not have the right to replace current high ranking officers.

A recent survey conducted by the Central Institute for Economic Management (CIEM) has pointed out that at SOEs many members of the board of directors are also the officials of ministries, provincial people’s committees or state management agencies. This means that the key persons cannot arrange enough time to join forces in the programming of the enterprises’ business plans and ensure business efficiency.

According to Tran Viet Cuong, Head of the Research Team of CIEM, the percentage of independent experts, scientists, consultancy institutions or auditing firms who join the board of directors at SOEs remains very limited. As a matter of fact, 100 percent state-owned enterprises do not have such independent experts at all.

The survey has found out that at 100 percent state-owned enterprises, the board of directors does not have the right to appoint general directors, while the enterprises do not have legal basis and do not conduct regular supervision and assessment over the operation of the board of directors and managers.

“That explains why the number of members of board of directors who have been assessed as unfulfilling their tasks is very low,” Cuong said.

Lacking legal basis

The research team has also pointed out that 68 percent of enterprises do not issue necessary regulations which can serve as the basis for assessing the operation of the board of directors.

There are no timely adjustments in human resources, there are no evident proofs to show who can fulfill their tasks well and who cannot. This explains why only 5.1 percent of enterprises said their members of board of directors were once dismissed because they could not fulfill the assigned duties. Only 4.1 percent of general directors were dismissed by the board of directors

Supervision board, what for?

Also according to Saigon tiep thi, at many enterprises, the supervision board is just a formalism. The reports from the head of the supervision board are always very cursory. Most of the reports praise the lucid management and decisions of the board of directors, but they do not have give constructive opinions.

Specifically, many reports say that the board of directors of enterprises and the leadership have created best conditions for the supervision board to operate, instead of affirming that cooperation is the responsibility of every party.

According to the Enterprise Law, the supervision board is a tool used to supervise the board of directors and managers of enterprises. The supervision protects the common interests of shareholders and enterprises. However, the supervision boards do not have the independence necessary for its function. The members of the supervision boards are the servants under the board of directors and managers – Vietnamnet

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs