Capital and asset management in state-owned enterprises

(Baonghean) - Economic Groups and State-owned Corporations (SGCs) play a particularly important role in the Vietnamese economy, as they are the sectors that are facilitated to accumulate and concentrate on a large scale to enhance competitiveness. Implementing the policy of gradually eliminating the system of governing ministries, governing administrative levels and the distinction between central and local enterprises, strengthening the role of state management over enterprises of all economic sectors is a measure to improve the efficiency of the economy.

Capital is one of the important tools for the State to regulate the macro economy, is the focal point for implementing public service tasks, solving many issues related to social security policies. In recent times, State-owned corporations and groups have made many contributions to the country's development, most of them have caught up with the market mechanism, grown and developed, accumulated and fulfilled the role of State-owned enterprises well.

However, besides that, many units are still weak in organizing production and business management, operating at a loss, losing capital, many units have allowed corruption to arise, and serious loss of state capital and assets.

Focus capital only on state-owned enterprises

According to the results of the State Audit (SA) recently announced on the current situation of management and use of state capital and assets at corporations and groups, in addition to achievements and contributions in many aspects, the current situation of finance and operations, and the management and use of state capital and assets have many limitations and weaknesses. Firstly, although the number of SOEs is large, most of the state capital, assets and resources are concentrated here, and this concentration also has risks, losses and is difficult to control. The results of audits of units in recent times show that a number of corporations and groups or member units have suffered losses, lost capital and left behind significant consequences for the economy as well as related fields.

Nghe An Automobile Mechanical Joint Stock Company cooperates with manufacturers to open auto showrooms. Photo: Hoang Vinh

Second, most of the units operating with high economic efficiency have the advantage of holding important resources such as resources, land or developing rapidly in some fields that are not in the field of material production such as banking, telecommunications, etc. Therefore, although supporting growth and development, they do not create a foundation for economic growth with internal strength and sustainability.

Third, the risk and reality of state capital loss is quite large. Some units are showing worse signs than previous years, with very large debts, risk of loss, and damage in corporate governance...

Fourth, risk management, corporate finance, strategy, market, and human resources still have many limitations. And finally, financial and accounting management still has many shortcomings and deficiencies.

As evidence for the above statements, the State Audit Office said that in 2011, the State Audit Office had to recommend increasing the state budget revenue by 305 trillion VND, in 2012 it recommended increasing the revenue by 206 trillion VND, in 2013 it recommended increasing the revenue by 1,656 trillion VND, and in 2014 it determined that the amount of tax payable to the state budget increased by 580 trillion VND,... these are figures worth thinking about.

Difficult to determine the responsibility of the leader

The causes of the shortcomings, limitations and weaknesses in the management and use of state capital and assets at State-owned enterprises and corporations are reflected in the fact that the internal management system has not yet met the requirements for effective management and supervision of the use of resources assigned by the State. Therefore, the compliance with the law, financial management regime, information disclosure and transparency of enterprises is still low; the implementation of the role of owner representative in state-owned enterprises is still scattered and overlapping. The process of organizing and restructuring state-owned enterprises is still slow and prolonged. Moreover, the situation of multi-sector investment, cross-investment and ownership also makes it difficult to inspect and supervise the use of state capital. In particular, focusing on state capital investment is limited in feasibility. The work of monitoring, controlling and supporting enterprises receiving investment capital is not yet thorough and effective.

In addition, the 2005 Enterprise Law has not resolved specific issues for SOEs; the assignment and decentralization of capital and asset management at enterprises among state management agencies are still overlapping, duplicated and unclear in scope. This reality leads to difficulty in determining the responsibility of the head when violations occur, regulations on prohibited acts, handling of violations in monitoring and evaluating the performance of SOEs are still lacking, not focused and not consistent.

Must be associated with the actual context of the enterprise.

To improve the efficiency and effectiveness of management and effective use of state capital invested in production and business, based on the requirements to improve the current situation of management and use of state capital in enterprises, in addition to promoting the creation of a legal corridor for the reform and innovation of state-owned enterprise management, it is necessary to review and regulate the operation of enterprises and manage state capital investment in enterprises in the direction of synchronous but specific and highly feasible governance.

Nghe Tinh Port has been operating effectively after equitization. Photo: PV

The State needs to organize inspections and assessments of the current state of SOEs in a comprehensive and comprehensive manner, in many aspects of management and operational governance to point out the advantages, strengths as well as shortcomings, limitations, difficulties and obstacles. From there, model the overall picture of SOEs to propose synchronous, long-term solutions, linked to the actual context of enterprises, the practical management conditions of the political and economic system of Vietnam in the form of a comprehensive and long-term development strategy. Based on the orientation of the strategy, the State is responsible for creating a unified and synchronous legal framework for enterprises to realize.

Second, the State needs to promote the reform of enterprise management methods, limit administrative intervention, hinder production and business activities, autonomy and self-responsibility of enterprises. Accordingly, the State only invests in enterprises that produce and supply essential products and services that other economic sectors do not participate in, and let private enterprises do what the private sector can do. In addition, the State also needs to develop mechanisms and regulations for enterprises to publicly disclose and transparently disclose information in accordance with international practices in order to implement socialization, strengthen self-management and supervision, implement publicity and transparency, and create development motivation for enterprises.

Third, to successfully implement the State-owned enterprise restructuring project, the State needs to have policies to thoroughly handle the old problems of enterprises, and remove the burden on enterprises in handling finances for restructuring. It is necessary to specifically and quantitatively define the goals and deadlines to facilitate the organization of implementation as well as the evaluation of implementation results.

Fourth, it is necessary to focus on training and building a team of enterprise leaders to meet the development requirements and exercise the rights of representatives of state capital ownership in enterprises. In necessary cases, it is necessary to establish a mechanism and promote the separation of the roles of owners and operators, thereby hiring a team of enterprise leaders to promote effective governance and create development momentum through the mechanism of contractual responsibility.

Finally, it is necessary to evaluate the results of implementing innovation in management and use of state capital assets at corporations and groups according to the criteria of effectiveness and efficiency (compliance with the law, achieving set goals and ensuring high economic efficiency). Detect and propose adjustments to mechanisms and policies if there are any shortcomings in practical application; guide and support enterprises to resolve difficulties and problems; have sanctions to strictly handle violations by leaders of corporations and groups.

Red River