"SOEs had many shortcomings and weaknesses and, in fact, had not yet played their key role in the State economic sector", said Vuong Dinh Hue

HA NOI (Biz Hub) — State-owned enterprises (SOEs) should develop further in accordance with market mechanisms, said experts at a conference in the city.

After more than 10 years of implementation of the Party's resolutions on SOEs, the sector has made significant contributions towards the national economy, said Vuong Dinh Hue, chairman of the Party Central Committee's Commission for Economic Affairs on June 6 in Ha Noi.

Speaking at a conference entitled Promoting the role of SOEs in a socialist-oriented market economy, co-organised by the Party Central Committee's Commission for Economic Affairs and the Party Committee of Centrally-run Business Bloc, he said the SOE sector had contributed 32.4 per cent to the national GDP in 2013.

The system of SOEs had been restructured and renewed to improve their business efficiency, he said. In 2013, 17 out of 18 largest State-owned corporations posted profits, with a return on equity rate (ROE) of 16.13 per cent and debt to equity ratio of 1.3.

He also said that SOEs, particularly large corporations, played dominant roles in many key economic sectors and had made great contributions towards socio-economic development. Many of them played crucial roles in stabilising the macro economy, carrying out national defence and security tasks, implementing social welfare policies and remedying natural disasters.

However, he said that SOEs had many shortcomings and weaknesses and, in fact, had not yet played their key role in the State economic sector, reported chinhphu.vn.

It was required that the key role of SOEs must be demonstrated by their competitiveness, their contributions to the economy and their influence on other economic sectors.

Their superiority in technology innovation, plus management skills and human resource quality were also issues they needed to address, he noted.

He asked SOEs to continue their restructuring and equitisation process to promote their key role in the national economy, and to only focus on major and essential sectors in strategic areas such as national defence and security.

Hue said that the key role of State-owned enterprises (SOEs) in the national economy should be institutionalised and realised in accordance with market mechanisms.

Nguyen Thi Kim Ngan, deputy chairwoman of the National Assembly said that to improve efficiency in operation, the SOEs must innovate and restructure themselves, including promoting of technology applications.

The enterprises should also promote withdrawal of their capital from non-core businesses and this should finish before the deadline of December 31, 2015. Additionally, these enterprises should improve efficiency in enterprise management and increase transparency in their operations.

Meanwhile, to enhance the performance of SOEs, Hoang Nguyen Hoc, Deputy General Director of the company's capital investment business (SCIC), said there was a need to improve the mechanism of attracting foreign investors in SOEs, and make more room for them to invest.

According to the current regulations, a foreign investor could hold 49 per cent of shares at a SOE at the maximum, Hoc said, but not all sectors need the State's control so all shares at some SOE of some sector should be sold to foreign investors.

A representative of Viet Nam Petroleum Corporation (Petrolimex) said it was necessary to resolve the conflict between public goals and interest of enterprises to ensure profits for shareholders. Support for the macro economy and ensuring social security of SOEs, should be replaced by ordering mechanisms of the State and payment according to the market mechanism.

Nguyen Dinh Cung, Director of the Institute of the Central Economic Management (CIEM), agreed with that proposal and also said that when suffering losses in business, the SOEs should not propose to reduce tax and delay payment of tax or other preferential things. All problems while doing business would be resolved under market rules. — VNS