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| Illustrative photo. Inefficient SOEs would be eliminated |
Currently, SOEs are divided into two groups: Wholly state-own enterprises and companies with at least a 50% stake owned by the state. In time to come, SOEs will be divided into four groups: Wholly state-owned, those with 75% owned by the state, those with 65% and those that are 50% state-owned.
Several industries would no longer be considered longer wholly state-owned, including some who produce petroleum, food, process oil and natural process gas, airport and road maintenance companies.
The government will only hold over 50% stakes in industries such as tobacco production, environmental sanitation, urban electricity, marine transportation, railway, aviation, finance and banking.
The government will no longer hold controlling stakes in several other industries including the production of science, documentary and cartoon films.
The plan received approval from the majority of economists in the country. Some said that the government should clarify how they would divert capital from SOEs and how to change the status of enterprises that are holding monopolies their industries, as well as how the move would effect operational efficiency.
Dr. Nguyen Dinh Cung, acting Director of the Central Insitute of Economic Research, said that diverting government capital would not be an easy task, as last year only 34 SOEs were privatised. State-owned groups and corporations withdrew only VND4.164 trillion (USD197.2 million) out of VD21.796 trillion (USD1.03 billion) worth of capital required for diverting in the first nine months of this year.
According to the National Assembly’s Committee of Economics, the inefficient operations of SOEs has has been a drag on the economy.
Even though SOEs used a lot of capital and resources, their revenues and profits do not correspond. SOEs’ capital demand is nearly double compared to the need of private companies to make the same profits. The lack of transparency and bad management are also of concern.
Economist Dinh Tuan Minh said that it is necessary to set detailed targets for the reduction of the proportion of SOEs in the economy, from 15-17% by 2015, and around 10% by 2020, which is the same as the world average rate.
