Plans afoot to aid fortunes of state-owned enterprises

Acall has been made for Vietnam to revise the regulations on the management and use of state capital in enterprises to create state-owned groups that can operate more effectively and contribute more to national economic development in line with the direction of the 13th National Party Congress.

state owned enterprises, soes, state capital, state-owned enterprises, SOEs, state capital
The plan to reshape SOEs like Saigon Newport Corporation into future leaders of their respective sectors will include 17 such corporations. Photo: Le Toan

With the new government cabinet taking shape last week, the Ministry of Finance’s Corporate Finance Department (CFD) is making a new plan to offer a helping hand to state-owned enterprises (SOEs) in 2021 and beyond, before submitting it to the government for approval.

The plan will cover “many new points to boost reform” which the department’s director Dang Quyet Tien said remain under discussion with aims to create a level playing field for all enterprises in the economy, as well as develop a team of huge SOEs playing a key role in driving the economy forward.

One of the most important tasks is to first revise the current Law on the Management and Use of State Capital Invested in Productive and Commercial Activities of Enterprises, which took effect in 2015.

According to the CFD, while the government has been trying to develop strong SOEs which play in a fairer environment and with more room created for private enterprises in that time, the law contains many vague points when it comes to implementation, making it hard to successfully reform many SOEs.

For example, one of the most controversial points in the current law is the loose definition of “state capital in enterprises” – meaning after the state invests capital into enterprises, the capital is understood to be either state capital or corporate capital. In another case, after investing capital into enterprises, the state focuses on managing both the capital and the enterprises’ governance activities.

Also, the current law also has regulations on fixing cap salaries and bonuses for positions at SOEs, not subject to the performance effectiveness of the enterprises.

“For instance, if a leader of an SOE creates a huge profit for the enterprise, his salary and bonus cannot be raised. This is unfair as it discourages the firm’s leader from becoming more creative, while he has to bear all responsibilities to how the business performs,” Tien said at last week’s workshop in Hanoi on reviewing five years of implementing the law. “Thus, these obstructions in the law are making it difficult for enterprises to use the capital for investment activities and enhance the creativity of enterprises. The law needs to be revised.”

The Ministry of Planning and Investment is planning to include seven key SOEs with a combined total asset value of over VND20 trillion ($870 million) for a pilot project on developing them to fuel the development of the economy and of other enterprises in their respective sectors.

These seven picked (Viettel, VNPT, MobiFone, Electricity of Vietnam, PetroVietnam, Saigon Newport Corporation, and Vietcombank) fit the bill in terms of having registered capital of over VND1.8 trillion ($78.3 million); having at least 30 per cent share of their prospective markets with the potential to expand this to a controlling stake; having an efficient corporate governance model; and applying high technology throughout their operations. Moreover, they operate in sectors with high spillover effects.

The initiative is also aimed to include a total of 17 groups and corporations in the future.

According to the Political Report - the most important document adopted by the Central Party Committee at the recent 13th National Party Congress, from now until 2025 all SOEs will continue being reshuffled, with them investing in only key fields of the economy and in geographical areas important in security and defence, and in the fields not invested by other economic sectors.

“Reshuffle of SOEs must be open and transparent, especially in equitisation and divestment. By 2025, the reshuffle must be completed, with loss-making groups and corporations to be addressed fully,” the report said.

The state will exclusively invest in only four fields – provision of indispensable products and services for society; service of defence and security; natural monopolies; and large-scale high-tech application, with major investment creating momentum for rapid development of the economy’s other fields.

Money collected from equitisation and divestment is to be managed in a concentrated fashion and used only for national key infrastructure projects and for supplementing charter capital for a number of SOEs operating in these four fields.

According to the CFD, in the 2011-2019 period only 679 SOEs were equitised and divested, with total money collected being $13.1 billion. Almost no SOEs saw such activities in 2020. In the first quarter of 2020, nearly $87 million was collected from equitisation and divestment.

By Thanh Dat

News Related

OTHER NEWS

Experts suggest issuing gov’t bonds on international capital market

The issuance of government bonds in international capital market is an option to mobilize funds for socio-economic investment projects in the coming time.  Since 2005 to date, Vietnam has issued government bonds in… Read more »

Phu Yen emerges as attractive market for tourism and property investment

The central province of Phu Yen is emerging as an attractive market for real estate investment, especially in large-scale hospitality projects.   Two luxury resort complexes of Xuan Dai Bay and Crystal Holidays Marina… Read more »

Cooperation crucial to build competent auto industry

Local automobile businesses are dependent on major foreign car manufacturers and their core technologies, a sticking point for true progress, photo Le Toan Vietnam has received praise for its control of the pandemic,… Read more »

Stock market has been ‘out of position’?

The market liquidity suddenly went down, the VN-Index still recorded increasing sessions but the “bounce” was getting worse. This seems to be a reflection of investors’ expectations that are not as much as… Read more »

New feed groups attempt to outmuscle top performers

Feed group sales are rising, but the competition is fierce with more farms outsourcing for husbandry companies. Photo: Le Toan As the largest animal feed production country in Southeast Asia, the sector in… Read more »

GDVC licenses Hateco Group’s customs clearance site for post and courier items

From April 29, the customs clearance site of Hateco Group (operated by Hateco Fulfillment) is allowed to receive post and courier items. They will be transported independently from international land border gates, international… Read more »

Actual FDI to Vietnam rises nearly 7% in four-month period

Disbursement of foreign direct investment (FDI) to Vietnam rose by 6.8% year-on-year in the first four months of this year to US$5.5 billion, a report of the Foreign Investment Agency (FIA) under the… Read more »

Chinese growth offering regional food for thought

Global economic performance post-pandemic will, for better or worse, be affected by the success or otherwise of China. Photo: Le Toan Ballooning exports have helped China’s GDP grow a record 18.3 per cent… Read more »

New wave of high-tech ventures await entry

Director general of the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency (FIA) Do Nhat Hoang confirmed that the number of South Korean investors setting eyes on Vietnam has been increasing, even… Read more »

Crafting specific measures to ensure top-quality growth

Jonathan Ostry, deputy director of the International Monetary Fund’s Asia and Pacific Department The Vietnamese economy grew 2.91 per cent in 2020 and 4.48 per cent in the first quarter of 2021. How… Read more »

DDCI complements PCI findings to improve business environment

Dr. Le Duy Binh, managing director of management consultants Economica Vietnam The PCI is fairly popular in Vietnam as a means of assessing innovation and competitiveness among localities. Why is an additional DDCI… Read more »

Dragon Capital-related fund prepares to ‘pour’ over VND 1,000 billion into Vietnam’s stock market through VFMVSF

At the end of the first quarter, VFMVFS had 24 stocks, of which HPG was the largest share with 12.52%. Vietnam DC25 is holding 83.42 million VFMVSF fund certificates. Vietnam DC25 Ltd., a… Read more »

Stock judgment April 29: Hope is only rekindled

Final structure date for domestic ETFs (Neutral) Vn-Index is forecasted to struggle with fluctuations in the next session. The index might challenge resistant level of 1.235-1.248 points. Tomorrow, investment funds according to the… Read more »

Many large stocks increased strongly, VN-Index increased nearly 9 points

15:00 At the end of the session, the demand increased again and helped pull many key stocks to increase, so the indices also extended the green color. In which, VPB increased 3.4%, VRE… Read more »

Digital transformation of technology stocks

Digital transformation will boost the growth of the information technology industry in the period 2021-2025, along with the growth of the broadband segment will open up investment opportunities in this group of stocks.… Read more »

SABECO tries its best to usher a brighter 2021 despite challenges ahead

SABECO tries its best to usher a brighter 2021 despite challenges ahead Vietnam’s biggest brewer has set a target revenue of VND 33.49 trillion ($1.33 billion) and net profits of VND5.2 trillion ($208… Read more »

Amazon announced to strengthen collaboration with iDEA

The two parties will jointly support Vietnamese sellers with cross-border e-commerce workshops and training series, aiming to provide them with skills and knowledge to capture global opportunities of transforming online. Simultaneously, Amazon Global… Read more »

Local steelmakers red hot on investment

Vietnam’s steel industry is now ranked in the top 15 biggest worldwide, photo Le Toan In particular, locally-invested steelmaker Hoa Phat Group surpassed Taiwan’s Hung Nghiep Formosa Ha Tinh to become Vietnam’s largest… Read more »

Uphill prospects in M&A activity through to 2022

Uphill prospects in M&A activity through to 2022 According to partner from Mazars Jack Nguyen, mergers and acquisitions (M&A) will be active for the remainder of 2021 as the Vietnamese market prepares itself… Read more »

The keys to M&A attraction

Pham Duy Khuong Managing director ASL LAW Besides, it is also one of the countries that have been able to control the COVID-19 epidemic, creating a safer environment for foreign investors. This encourages… Read more »

Index results spark reforms in Vietnamese metropolises

While some provinces have become shining examples in Vietnam’s PCI, its metropolises are lagging behind. Photo: Le Toan According to the Korea Chamber of Business in Vietnam (KorCham), Hanoi is planning to organise… Read more »

New General Director takes the lead of Shinhan Finance

Having been working for Shinhan Card (Korea), the parent company of Shinhan Vietnam Finance Company (Shinhan Finance), for more than 26 years, Oh Taejoon has a wealth of experience in risk management, business… Read more »

ADB forcasts Vietnam’s economic growth to rebound to 6.7 per cent this year

ADB highlighted bright prospects for the Vietnamese economy  “Stagnant domestic consumption and weak external demand caused by the COVID-19 pandemic slowed down Vietnam’s economy last year, but the growth momentum remains strong this… Read more »

Japfa inaugurates pig farm with 10,000 sows in Binh Phuoc province

The launching ceremony of Japfa Vietnam’s pig farm with 10,000 sows in Binh Phuoc  The 22-hectare farm is aimed to supply breeding piglets of the best quality for the domestic market and for… Read more »

Creaking infrastructure bites into rail network’s potential

There are complexities in funnelling through funding in a timely manner so that the railway sector can modernise itself Leaders of Petrolimex Hanoi – a unit of Vietnam National Petroleum Group (Petrolimex) –… Read more »

Safety on the line for railway system in stagnation crisis

Vu Anh Minh, chairman of Vietnam Railways There are different ideas in Vietnam about how much state funding should be allocated for railway maintenance this year, which is causing difficulties for the industry… Read more »

Foreign companies ramp up investment in tyre production

Foreign investors are increasing tyre production capacity in Vietnam  Kumho Tire, one of the world’s leading tyre manufacturers, has today that they will be investing $305 million to expand upon their Vietnam tyre plant… Read more »

UNDP urges better business practices

Businesses in Vietnam need to go beyond the bare minimum laid out in regulations. Photo: Shutterstock At last week’s launch of a study on corporate awareness and implementation of responsible business practices (RBP)… Read more »

Indian investors seek investment opportunities in Vietnam

Indian authorities and businesses wish to have a greater presence in Vietnam by cooperating with local enterprises in the southern Vietnam in diverse aspects such as agriculture, industry, machinery and equipment, healthcare, education,… Read more »

Risks at the fore in global wood trade

The wood industry has to take into account developments in US-China trade as well as South Korean anti-dumping probes. Photo: Le Toan “The Ministry of Agriculture and Rural Development has received documents from… Read more »

Demand surged, VN-Index recovered

11:30 Pausing the morning session, the VN-Index decreased by 0.05 points to 1,215.72 points. There were 142 gainers, 248 losers and 49 unchanged stocks. The HNX-Index fell 1.47 points (-0.52%) to 279.21 points.… Read more »

Refining the implementation of ESG at Vietnamese corporates

Nick Ainsworth, chief marketing officer at Dragon Capital Group How do you assess the potential of Vietnam-based firms to successfully embed environmental, social, and corporate governance (ESG) criteria into their investment portfolios and… Read more »

Vietnam’s potential to drive agri-food recovery ranks second highest in the region

The agri-food sector could play a major role in Vietnam’s recovery Commissioned by the Food Industry Asia (FIA) to better understand the challenges and economic impact of the agri-food sector faced in 2020,… Read more »

Phu Quoc turns into Southeast Asia’s must-go destination of tourists and investors

The establishment of a super tourism complex is expected to turn the southern province of Kien Giang, where is home to famous tourism island of Phu Quoc, into a hub of tourism and… Read more »

Fund movement week April 19-25: Dragon Capital bought ACB, sold CII and KDH

Two more related funds, Dragon Capital, bought nearly 9 million ACB shares. Dragon Capital sold more than 3.2 million shares of CII and also holds a 9.33% stake. Dragon Capital also net sold… Read more »

Fubon FTSE Vietnam ETF increased to 270 million USD after 1 month of IPO

According to information from Fubon FTSE Vietnam ETF, as of April 23, 2021, the size of the fund portfolio is now up to 7.5 billion Taiwan dollars (about 270 million USD, equivalent to… Read more »

Newly-registered FDI capital in first four months up 25 per cent on-year

Newly-registered FDI in the first four months increased significantly overyear The total newly-registered and added capital, as well as capital contributions and share purchases in the first four months of the year amounted to… Read more »

Sanofi’s ambition to empower lives

Sanofi Vietnam and Ho Chi Minh Oncology Hospital signed a new cooperation agreement Sanofi is planning to convene a shareholders’ meeting on April 30 to discuss the current health crisis and Sanofi’s commitment… Read more »

Practical outings for the summer break

Trekking in the fresh nature of Binh Dinh province Summer camps are a great way to ensure children have well-supervised experiences while learning to socialise and also make new friends. They are also… Read more »

27 years of contribution to Vietnam’s healthcare

Nitin Kapoor, chairman and general director of AstraZeneca Vietnam AstraZeneca Vietnam has won the “Great Contribution to Healthcare” award by the British Chamber of Commerce Vietnam, presented by British Ambassador Gareth Ward. Could… Read more »

Smart education management app PHX Smart School wins Sao Khue Award 2021

Le Thi Minh Thao, deputy director-general of Phenikaa Group, receiving the Sao Khue Award 2021 The Sao Khue Awards was first initiated by the Vietnam Software and IT Services Association in 2003 to… Read more »

Danang parades investing advantages

Danang High-tech Park welcomes many investors to set up business According to the latest figures from the Provincial Competitiveness Index (PCI) 2020 offered by the Vietnam Chamber of Commerce and Industry, Danang sits… Read more »

Bamboo Airways embraces PIA Group as strategic partner in aerospace engineering

According to the agreement, as a strategic partner of Bamboo Airways, PIA Engineering under PIA Group will provide the airline with maintenance, repair, and guarantee services for aircraft components such as maintenance, repair,… Read more »

Carlsberg’s community contributions

Carlsberg Vietnam’s initiatives are not only bringing fresh water to the central region, but also smiles COVID-19 has left its mark on almost every aspect of life and became one of the biggest… Read more »

Millennium Energy Vietnam proposes to develop $15 billion LNG project in Soc Trang

Millennium Energy Vietnam has proposed another LNG project doubling its capacity in Vietnam (Illustration photo) Having total investment capital of $15 billion, the LNG project has a designed capacity of 9,600MW. The investor… Read more »

Working with a smile at SABECO

SABECO is a trusted brand for domestic consumers and a company of international stature. It has also set sights on endeavouring to become the country’s leading beverage company by 2025. What kind of… Read more »

Quang Ninh retains mantle in latest PCI evaluation

Quang Ninh province has yet again topped the PCI rankings, for the fourth year in a row The Provincial Competitiveness Index (PCI) 2020 was announced on April 15, with Quang Ninh marking a… Read more »

Nestlé Vietnam takes award for bettering lives across Vietnam

Representatives of Nestlé received the Vietnam National Quality Gold Award 2019-2020 Nestlé Vietnam is one of 116 winners of this prestigious award for the two years. The Vietnam National Quality Awards include seven… Read more »

Capital poured into Vietnamese technology startups fell sharply during the ‘storm’ Covid-19

This is a remarkable figure recently announced by Singapore-based venture fund Cento Ventures. This development is quite surprising because overall, Southeast Asia still attracts the same amount of capital as in 2019, but… Read more »

Market commentary April 26: ‘Retest the 1,260 point level’

Securities companies Positive Neutral Negative AseanSC X BSC X BVSC X MBS X SHS X VDSC YSVN X Large-cap stocks can continue to lead the market to rise (Asean Securities Company – AseanSC)… Read more »