The Ministry of Planning and Investment recently proposed a moratorium on the establishment of new state-owned economic groups in the next 2-3 years.
Most of the groups operate profitably, but are sill not very competitive
The goal would be to focus on restructuring current state-owned economic groups, placing priority on their core business areas, said Deputy Minister of Planning and Investment Dang Huy Dong at a recent preliminary meeting to review on the business practices of such groups.
Most of the groups operate profitably, but are sill not very competitive. They lack adequate supervision of project implementation, resulting in inefficiency.
Dong added that, many of these groups have expanded their dealings outside their non-core areas, becoming involved in banking, finance and real estate. They do this, he said, despite limited financial capacity.
“That the groups use their resources and advantages to invest in areas in which they compete with private firms directly restricts the development for the private sector. Moreover, their huge investments often do not bring about good results,” he noted.
At the meeting, representatives from economic groups proposed that the Government quickly finalise policies related to the setup, operation, management and supervision mechanisms of these groups, as well as standards for assessing their efficiency.
To date, Vietnam has piloted establishment of 12 state-owned economic groups. Of those, 11 now hold 30% of total asset value, 51% of equity and 40% of the workforce of the state-owned economic sector. For the the entire economy, these figures translate to 10%, 14% and 7.6% respectively.
Recently, the 12th National Assembly Economic Committee also recommended halting the establishment of new economic groups until the 13th National Assembly.