By far the country has more than 10 State-owned economic groups in key economic sectors.

The establishment of economic groups is necessary

The reality of countries with market economies shows that it is necessary to set up economic groups, which are financially strong and highly competitive and bring their strength into full play for the benefit of economic co-operation. If the country lacks powerful groups and businesses, it won’t attract any potential foreign and trans-national groups.

From a market economy view, many economic experts point out some basic factors that are needed in the process of forming an economic group. First and foremost is competition among businesses. If they are good at managing and doing business they will become ever stronger to take over others. As a rule, economic groups are formed through a natural selection.

An economist, Nguyen Van Nam, says that forming economic groups is not just the joining of several related businesses. In Vietnam, private business began to develop strongly and compete with State-owned enterprises. In addition, competition between foreign and domestic businesses is also fiercer, causing a pressure on monopoly businesses. Instead of re-vamping their trading methods and calculating how to operate more effectively, they proposed that the Government establish groups and takes on other businesses. In the short-term, this can lessen competitiveness and increase capital and human resources.

State does not subsidy groups

Several years after being set up, economic groups need to evaluate working efficiency. If the profit ratio and competitive capacity indicators have not improved measures should be taken to resolve the problem.

Director of the Fulbright Economics Teaching Programme, Vu Thanh An emphasizes the need to use capital efficiently. If a group focuses on economic efficiency it must effectively use the capital contributed by citizens to the State budget.

Mr Thanh says that economic groups should upgrade their business management methods, focusing on efficiency, competitiveness and transparency. “The State requires groups and businesses to operate more effectively, have proper business management methods and compete with other economic sectors. They should not rely on the State for support,” he adds.

The key success is a business’s competitive capacity. If businesses want to develop into a group but their operational efficiency has not improved, economic growth will face difficulties.

In the process of international integration and fierce competition, the establishment of groups in key economic sectors is of great significance. However, several economic experts have proposed considering the efficiency of the model. A group can stand firm if it is formed through competition and in line with market regulations.