Fast and effective in restructuring state-owned enterprises

Many corporations and general companies have had their restructuring plans approved. Photo: TKV

Ensuring effective and substantive restructuring goals

According to the report of the Ministry of Finance, regarding equitization, units continue to implement the approved plan to restructure state-owned enterprises and enterprises with state capital for the period 2022-2025 approved by the Prime Minister. However, in the first 6 months of 2024, no enterprise has had its equitization plan approved by competent authorities.

Regarding divestment, in the first 6 months of 2024, state capital was divested from 4 enterprises (F1) with a total value of state capital of VND 139 billion, earning VND 149.2 billion; corporations, general companies, and state-owned enterprises divested from 2 enterprises (F2) with a value of VND 39.91 billion, earning VND 180.58 billion.

Regarding the restructuring of state-owned enterprises, according to the report of the State Capital Management Committee at Enterprises, by the end of June, the restructuring projects of 15 groups and corporations had been approved (PVN, TKV, Vinachem, Vinafood 1, Petrolimex, Vinafor, ACV, VIMC, VRG, Vinafood 2, Mobifone, Vinacafe, Vinataba, VNR, VNPT).

In mid-July 2024, Deputy Prime Minister Le Minh Khai signed a decision approving the restructuring plan and project of SCIC until 2025. The goal of restructuring SCIC is to ensure rationality, promote the leading role as an enterprise investing and trading capital according to regulations; exploit domestic investment opportunities well and gradually reach out to the international market... The implementation of this project aims to help SCIC aim for an average annual revenue of VND 9,400 billion; average annual after-tax profit of VND 6,700 billion...

According to the Committee, corporations and general companies are urgently implementing the approved Project, ensuring effectiveness, substance and progress as required. For example, the Southern Food Corporation (Vinafood 2) has established an Implementation Team and developed a plan to implement the Project to restructure the Corporation, and at the same time sent a document to the capital representatives at the companies with capital contributions from the Corporation to request a report on the company's operations to serve the Corporation's capital transfer plan and report on the origin, current status and legality of the houses and land under management and use...

However, in the first half of the year, reports from the Ministry of Finance and the State Capital Management Committee at Enterprises both assessed that restructuring, equitization, divestment, and rearrangement of houses and land at corporations and general companies were generally slower than required.

Creating flexibility for state-owned enterprise governance

In fact, many SOEs have achieved outstanding business performance after restructuring and divestment. For example, at Rang Dong Light Bulb and Vacuum Flask Joint Stock Company, after 20 years of equitization (2003-2023), the Company reported that its revenue had increased 24 times, its contribution to the state budget had increased 16.8 times, and its realized profit had increased 34.7 times. At the Industrial Development and Investment Corporation - JSC (Becamex), near the end of May 2024, Deputy Prime Minister Le Minh Khai approved the decision to reduce the state capital ratio from 95.44% to 65% until the end of 2025. This is one of the conditions for Becamex's leadership to set a goal of becoming an enterprise with a market capitalization of USD 5 billion or more by 2025.

Speaking at the recent 6-month review conference of 2024, Mr. Nguyen Huy Hung, Chairman of the Board of Directors of Vinafood 2, said that in the last 6 months of 2024, the Corporation will focus on implementing the approved restructuring plan of the Corporation for the period 2021-2025; at the same time, continue to improve leadership and management personnel and reorganize the apparatus... to improve management methods and increase labor productivity.

However, to increase efficiency and remove obstacles in mechanisms and policies, promote the progress of equitization, divestment of state capital, and restructuring of state-owned enterprises, the Ministry of Finance said it is synthesizing, researching, and submitting to competent authorities to amend and supplement related mechanisms and policies. Of which, the most notable is the research and drafting of the Law on Management and Investment of State Capital in Enterprises.

Economist Dr. Vo Tri Thanh, Director of the Institute for Brand Strategy and Competition Research, assessed that the promulgation of this Law will help the State separate itself from its management role and not directly intervene in the operation, production and business processes of SOEs, thereby creating flexibility for SOE governance in the face of rapid market movements.

The State Capital Management Committee at Enterprises has also requested corporations and general corporations to continue implementing approved strategies, plans, projects and operating regulations. Corporations and general corporations also need to urgently innovate and modernize corporate governance according to the market economy mechanism and international principles and standards. Review, detect and resolutely handle loss-making enterprises and ineffective and low-efficiency investment projects according to market principles. Strengthen inspection and supervision to prevent loss of capital and state assets during business operations and the process of restructuring, equitization, divestment and management and use of state capital.