Stakeholders urge more autonomy for State-owned businesses

Tuesday, Feb 28, 2023 07:29

A PetroVietnam oil rig. PetroVietnam is a giant State-owned enterprise with assets of around US$40 billion. — Photo

Stakeholders are calling for a new decision-making mechanism for State-owned enterprises to allow them to operate more independently and sustainably.

A representative of a State-owned enterprise (SOE) revealed that operationally SOEs do not run autonomously but from instructions from higher up.

Such a hands-on way of management has resulted in backlogs and delays, leading to a situation in which his enterprise delivered just 51 per cent of the spending target set in the previous year.

"State-own enterprises can do nothing more than follow instructions," said the representative.

He also complained that the operational plan of his enterprise for 2021-2025 had yet to be approved by higher authorities. The delay has greatly hindered its effort to raise funds for future projects.

Other SOEs share the representative'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 of many levels for approval. However, the authorities normally send them a document packed with legal phrases, implying their plan has been disapproved.

Ho Quang Trung, deputy director of the Department of Energy, Commission for the Management of State Capital at Enterprises (CMSC), admitted that such a bureaucratic problem had 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 (PetroVietnam) to do the same thing," said Trung.

Nguyen Tu Anh, director general of the Department of General Economic Affairs, 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 per cent in 2022, higher than the national average of 11.2 per cent and 8.9 per cent in the private sector. However, SOEs are using on their own capital to finance investing activities.

"State-owned enterprises 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 lessened in recent years. Total government bonds in 2022 stood at just 41.1 per cent of those in 2021 and equalled around 24 per cent 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 Chinh assigned CMSC the task of streamlining SOEs to improve their performance in line with what was stated in the Economic Restructuring Plan for 2021-2025.

The PM also requested the commission to look into the obstacles holding back SOEs and make a report on the obstacles. The report will be submitted to the Government and be used in a governmental meeting about SOEs. — VNS

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