The Ministry of Finance seeks permission to set up supervising department
“The department will look after the effectiveness of the use of state capital, especially in the state-owned enterprises (SOE),” Deputy Minister of Finance Do Hoang Anh Tuan said at a press briefing yesterday.
Tuan said the managing system over the SOEs over the last few years has been inconsistent and ineffective, creating the necessity for a general department to watch for and uncover economic offences at the enterprises in a timely manner.
The supervisor will also monitor SOE’s loans, and seek to have them publicise their operational and financial statuses to ensure healthy competition and equality between state-run companies and those in the private sector, added Tuan.
Special supervisors
Tuan said 80 officials from the Ministry of Finance will be tasked to work in the SOEs to supervise their operations.
“These officials will still work for the finance ministry, and will not receive extra wages from the enterprises,” he said.
The state-run companies in Vietnam currently have a total equity of VND653 trillion (USD31.3 billion), and a debt to equity ratio of 1.67, according to figures obtained by Tuan.
“That is not a high ratio compared with those from other countries, but the problem lies in seven SOEs whose debts are five to seven times higher than their equity,” he said.
“These firms are set for privatization to increase their operational effectiveness.”
In regard to the unequal footing between the public and private sectors, Tuan said while private businesses have to suffer the burden of bank loans, the SOEs are enjoying VND653-trillion in capital from the government.
“SOEs are also allowed to use the post-tax revenues from state capital, which is sometimes as large as VND100 trillion, for reinvestment activities,” he added.
“It’s obvious that SOEs do not have to bear the loan pressure, while they also have annual additional capital without paying interest.
“The inequality also creates no pressure for SOEs to strengthen their effectiveness.
“We should look into the issue to force the SOEs to healthily compete with the non-state businesses,” he concluded.