Efficiency is not commensurate with state capital resources invested in enterprises

By the end of 2023, the country had 841 enterprises with state capital contributions. Photo: Internet

Over VND1.75 trillion of state capital in enterprises

On behalf of the Government, Deputy Prime Minister and Minister of Finance Ho Duc Phoc signed and approved a report to the National Assembly before the 8th Session on investment, management and use of state capital in enterprises nationwide in 2023.

The equitization and divestment of state-owned enterprises are still slow. According to the report of the Ministry of Finance, in September 2024, units continued to implement the equitization work as approved, but no enterprise had its equitization plan approved by the competent authority.

In the first 9 months of 2024, state capital was divested from 5 enterprises with a total value of state capital of VND 145 billion, earning VND 157 billion; corporations, general companies, and state-owned enterprises divested from 3 enterprises with a value of VND 40.9 billion, earning VND 182 billion.

According to the report, by the end of 2023, the country had 841 enterprises with state capital contributions, but 28 enterprises had no reported data.

Of which, 473 enterprises were 100% state-owned, 198 enterprises were over 50% state-owned, and the rest were 50% or less state-owned.

According to the reports of 813 enterprises, by the end of 2023, the total state capital invested in these enterprises was more than 1.75 million billion VND, an increase of 2% compared to the beginning of 2023, of which state capital in enterprises with 100% state-owned capital was nearly 1.59 million billion VND. Pre-tax profit in 2023 reached nearly VND 218 trillion, down 13% compared to 2022.

Notably, the total debt payable by the end of 2023 of state-owned enterprises was nearly VND2.1 trillion, up 2% compared to the beginning of 2023.

The total value of receivables was more than VND 605 trillion, up 5% compared to the beginning of 2023, of which bad debt was more than VND 66.8 trillion, accounting for 11% of total receivables and enterprises have set aside nearly VND 51.2 trillion for the loss value of bad debt.

According to the Government's report, in 2023, 25 enterprises received additional state capital investment.

Of which, additional state capital investment of nearly VND 8,590 billion was invested in 20 enterprises with 100% charter capital held by the state; additional VND 15.24 trillion was invested in 5 joint stock companies from distributed dividends and the Development Investment Fund.

The assessment report stated that state investment in enterprises has closely followed the objectives, scope, order and procedures; the representative agencies of the owners have exercised their rights and responsibilities in investing state capital and enterprises.

Increasing charter capital helps enterprises increase their business potential, expand business, diversify production and business, increase revenue, increase annual state budget revenue, ensure income, improve service quality and contribute to the socio-economic development of the locality.

State and enterprise investment capital, mainly from the Development Investment Fund, has been balanced and used by enterprises to implement investment projects and put into use for the enterprise's tasks.

The rate of pre-tax return on equity capital decreases

However, the Report on the efficiency of state capital investment in enterprises also pointed out many notable figures. The most obvious is that the average pre-tax return on equity (ROE) in 2023 only reached 12%, lower than the 14% in 2022. However, considering the ROE of each type of enterprise, enterprises with less state capital operate more effectively.

Specifically, in 2023, the average ROE of groups and corporations in which the state holds 100% of charter capital is 11%. Meanwhile, the average ROE of enterprises in which the state holds more than 50% of charter capital is 14%, and enterprises in which the state holds less than 50% of capital is 15%.

The Government's report also pointed out some shortcomings of state-owned enterprises, including that their operational efficiency is not commensurate with their resources.

Although corporations and general companies have made great efforts to implement new investment projects, the investment efficiency has not been as expected, overseas investment has encountered difficulties, some large investment projects have not been successful, there are potential risks, some projects have accumulated large losses for many years, the restructuring method is not effective, etc.

The reason given is that the management mechanism and policies for state-owned enterprises are still inadequate, not creating conditions to fully promote the initiative in production and business activities; regulations on state-owned enterprises are scattered in many legal documents, so there are complicated and overlapping regulations. Moreover, the process of direct investment of state budget capital into enterprises is difficult.

Therefore, in order to improve the efficiency of management and use of state capital invested in production and business at enterprises, the Ministry of Finance has consulted and drafted for the Government to submit to the National Assembly the draft Law on Management and Investment of State Capital at Enterprises to replace the Law on Management and Use of State Capital in Production and Business at Enterprises (Law No. 69/2014/QH13).

Speaking at the 38th Session of the National Assembly Standing Committee on October 7, 2024, Deputy Minister of Finance Cao Anh Tuan said that this replacement is necessary to meet new requirements from management practices and international integration, promptly overcoming the limit ations and shortcomings of Law 69.

According to the provisions of the draft Law, the use of capital and assets is regulated in the direction of "state capital investment in enterprises"; The management of receivables and payables is assigned to enterprises to decide in order to clearly identify the State as the owner of capital investment, management according to the capital contribution in the enterprise, not to intervene administratively in the operation of the enterprise; at the same time, strengthen decentralization associated with the accountability of enterprises.

Regarding the subjects of application, the Government agreed that the draft Law does not include enterprises with other State capital investment within the scope of the Law and assigns responsibility to enterprises with State capital investment.