Prime Minister speeds up SOE restructuring

The overhaul of SOEs in the previous five-year period helped reduce the number of SOEs, promote divestments from non-core businesses and increase the operational efficiency of SOEs. However, the restructuring progress remained stagnant; the State still held controlling stakes in many sectors, and the efficiency of SOEs was low, compared to its resources, according to the decree.

In addition, there was a lack of regulations on accountability in evaluating the value of SOEs, along with a failure in separating State ownership and management performances at SOEs.

In the next five-year period, the Prime Minister asked relevant ministries and organisations to gear up efforts for hastening the restructuring of SOEs, with a focus on quality, rather than quantity.

Accordingly, the Ministry of Finance was assigned to issue, in the first quarter of 2017, decrees which aimed at clarifying accountability of consultancy organisations in evaluating State assets at SOEs for privatisation and divestment, as well as raising mechanisms to attract strategic investors.

Of note, the Ministry of Planning and Investment must propose a special committee which would function as the owner of State assets at SOEs, for the Government’s consideration this month.

Other relevant amendments must be introduced by the second quarter of this year, to ensure compliance with the laws on Enterprise, Investment and Management and Use of State Capital Invested in Production and Business at Enterprises.

The decree said that appropriate mechanisms must be raised to attract competent strategic investors and reduce State stakes to a level that could enable change in corporate management. In addition, business strategies must be developed for each SOE, while their brand values must be accounted as an asset privatisation occurs.

The Prime Minister also asked to increase supervision to prevent losses to State assets during the restructuring progress, affirming the determination to handle loss-making SOEs and inefficient projects.

Accountability in the restructuring of SOEs must be clarified, while violations must be strictly handled, the decree said.

Between 2011 and 2015 almost 600 SOEs were equitised, or 96 percent of the targeted number. The number of SOEs has since fallen from some 6,000 to over 700 during the past 15 years.

In December, the Prime Minister issued Decision 58/2016/QD-TTg which fixes the rate of State ownership in individual firms that are to be equitized, rather than the sector-wise rate the Government used to fix earlier.

Accordingly, the Government will hold 100 percent stakes at 103 SOEs, while 137 others will be equitised from 2016-20.