In the government’s regular meeting in January, Prime Minister Pham Minh Chính assigned CMSC the task of streamlining SOEs to improve their performance in line with what was recommended in the Economic Restructuring Plan for 2021 to 2025. — Reuters
HANOI: Stakeholders are calling for a new decision-making mechanism for state-owned enterprises (SOEs) that will allow them to operate more independently.
According to an SOE representative, they do not operate autonomously but rather on orders from higher up.
Such a hands-on way of managing has resulted in backlogs and delays, leading to a situation in which his enterprise delivered just 51% of the spending target set in the previous year.
“SOEs can do nothing more than follow instructions,” said the representative.
He also complained that the operational plan of his enterprise for 2021 to 2025 had yet to be approved by higher authorities. The delay has greatly hindered its efforts to raise funds for future projects.
Other SOE staff shared the source’s view that the multi-layered bureaucracy has been holding back their performance.
When SOEs plan to do something, they must submit it to higher authorities at many levels for approval. However, the authorities normally send them a document packed with legal phrases, implying their plan was disapproved.
Ho Quang Trung, deputy director of the Department of Energy’s Commission for the Management of State Capital at Enterprises (CMSC), admitted that such a bureaucratic problem has been around for quite a while.
“It takes only two months for Hoa Phat Group to make an environmental impact report, whereas it takes around two years for Vietnam Oil and Gas Group to do the same thing,” said Trung.
Nguyen Tu Anh, director general of the Department of General Economic Affairs and the Central Party’s Economic Commission, called for measures to boost SOEs’ expenditure on investing activities.
He said SOEs’ expenditure on investing activities rose by 13.1% in 2022, higher than the national average of 11.2% and 8.9% in the private sector.
“SOEs must leverage other sources of capital to boost their investments further,” said Anh.
It is no mean feat for SOEs to increase their financial leverage because capital-raising falls outside SOEs’ authority. Bank loans are not a feasible option either, as banks are normally discouraged by the cumbersome loan-making process involving SOEs.
Bond-issuing is another option open to SOEs, but this source of funds has contracted in recent years. Total government bonds in 2022 stood at just 41.1% of those in 2021 and equalled around 24% of the figure in 2020.
“If SOEs can pull off more capital from bond-issuing, they would have enough money to push ahead with their unfinished projects,” added Anh.
In the government’s regular meeting in January, Prime Minister Pham Minh Chính assigned CMSC the task of streamlining SOEs to improve their performance in line with what was recommended in the Economic Restructuring Plan for 2021 to 2025.
The Prime Minister also requested the commission look into the obstacles holding back SOEs and make a report on the obstacles. The report will be submitted to the government and used in a governmental meeting about SOEs. — Viet Nam News/ANN
