Quality should be prioritised in SOE restructuring, expert says

The restructuring and equitisation of State-owned enterprises (SOEs) should focus on quality instead of quantity, and the State’s investments need to be restructured to become more effective, an expert has said.

Quy Nhon Port, located in Binh Dinh province, is owned by the State and subject to equitisation (Photo: VNA)

Quy Nhon Port, located in Binh Dinh province, is owned by the State and subject to equitisation (Photo: VNA)

The remark was made by Director of the Central Institute for Economic Management (CIEM) Nguyen Dinh Cung at a conference on the reform and improvement of SOEs on November 21.
At this event, Deputy Prime Minister Vuong Dinh Hue emphasised the viewpoint that SOEs should focus only on key fields like defence and security as well as areas that the private sector does not invest in, and that the State only divests its capital from firms with effective operation.
He noted that the equitised and divested value between 2016 and 2018 rose 2.5-fold from the 2011-2015 period, adding that operations of SOEs have continued to improve.
Their total assets have increased by 3 percent, pre-tax profit up 4 percent, and contributions to the State budget up 5 percent from 2016. In the first eight months of 2018, SOEs fulfilled over 70 percent of this year’s revenue and profit targets, Hue said.
CIEM Director Cung said SOEs are still an irreplaceable economic force for the time ahead.
“At present, we solely focus on equitisation and divestment because we hope that businesses will change their administration and operate in line with the market,” he noted.
Pointing out problems in the equitisation and divestment process, Minister of Finance Dinh Tien Dung said that according to the Prime Minister-approved plan, at least 85 SOEs must have their equitisations completed in 2018. However, only 12 firms had been equitised as of November 18, so the target is unlikely to be reached this year.
Meanwhile, State capital must be divested from 181 enterprises in 2018, but the work has only been completed in 31 firms so far.
He said that in order to step up the reform and improvement of SOEs, ministries, sectors, localities, as well as SOEs themselves must be synchronous in adapting careful measures, including promoting consensus in the work and promptly fine-tuning the relevant legal system.
Dung also asked the parties concerned to submit restructuring plans for the SOEs under their remit to authorised agencies for approval before the end of this year. Additionally, heads of ministries, sectors, and localities must be responsible for the outcomes of SOEs’ restructuring, reform, and improvement. 

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