NA hears reports on state-owned corporations

The Standing Committee of the National Assembly heard its supervision team’s report on state-owned groups and corporations’ compliance with legal regulations on managing State assets and funds Thursday morning.

Addressing the meeting, the chairman of the National Assembly, Nguyen Phu Trong, proposed the team focus on state-owned groups and corporations’ management and use of State assets and funds.

The team was also requested to point out limitations in current policies and areas which need attention, including proposals to correct them.

The team’s finalized proposals will be submitted for consideration in the 6th session of the upcoming National Assembly.

After hearing the reports, many members of the committee showed their agreement with the supervision team’s conclusions and proposals in the reports.

The chairman of the Financial and Budget Committee, Phung Quoc Hien, aksed the team to point out groups and corporations that have large debts and propose ways to settle them.

Twenty groups and corporations have suffered losses for years and Mr Hien said that it is necessary to review their operations to see whether they have used their funds to invest in high risk fields, such as real estate, finance or stocks.

Mr Hien stressed that although they are allowed to make investments in different fields, groups must adhere to their registered business activities.

In response, the reports of the supervision team asserted that a number of groups and corporations have made large investments in financial activities and real estate, although they did not mobilize enough funds for carrying out their registered projects.

According to the reports, most of the investments made by state-owned groups and corporations’ in 2007 and 2008 had yielded few profits due to the current economic crisis.

Figures given by the supervision team showed that the groups and corporations’ rate of return on equity has been rising and their capital adequacy ratio is still under legal limits.

The team, however, assessed that the state-owned groups and corporations have not managed and used their capital effectively and efficiently. Their business performance has not matched their scale, position and role in the country’s economy, emphasized the supervision team.

The team’s reports also revealed that a number of groups have small equity that cannot meet the demand of their operations, while others have very high debt to equity ratio, which adversely affects their stability and development.

Noticeably, a number of groups have issued bonds and sold them to credit organizations to mobilize funds, which will be used to pay their bank loans. This is an unhealthy sign in the credit relationship, stressed the reports.

The supervision team also said that many state–owned groups and corporations have not yet used land allocated for their projects effectively. Many plots of land have been left unused. 

By Anh Phuong – Translated by Phuong Lan

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