Vietnam: Renovation of monitoring mechanisms in the process of restructing SOEs

Vietnam: Renovation of monitoring mechanisms in the process of restructing SOEs

Workshop on: “Renovation of monitoring mechanisms of owner’s representative offices in the process of restructuring SOEs” under The Aus4Reform Program of $6.5 million AUD funded by the Australian Government, which will support Vietnam’s reform, development and implementation of important economic, legal and institutional policies that help the Vietnamese economy promote their potential.

At the same time, achieving the goal of improving the business environment and bringing Vietnam closer to the market economy.

At the workshop on “Renovation of monitoring mechanisms of owner’s representative offices in the process of restructuring SOEs”, experts will indicate the current situation and propose proposals to renovate mechanism of mitigation through owner’s representatitive offices in the SOEs restructuring process.

According to Mr. Raymond Mallon (policy advisor of the Aus4reform program), in order to implement the mechanism of supervision of SOEs, it is necessary to manage the representative office of the enterprise owner; consider management and reporting to make sure that the business owner representation agency is gradually improving and performing well the monitoring of SOEs; The management of data, information and transparency is clearly two elements that needed attention in the reform of the monitoring mechanism; There should be agreed standards and norms to facilitate comparative and accountability analysis; It is vital to establish corporate governance norms under the advice of all stakeholders. However, detailed practical proposals are still needed on the best approaches to achieve these results.

Economist Pham Chi Lan said that the updated information, experiences and lessons on management and monitoring SOEs have been updated since the 1999 Enterprise Law was valid. There were thousands of seminars, inbound and outbound tours organized with thousands of officials responsible for overseeing SOEs. Funds were taken from the budget, from ODA and SOEs. However, the current result is a problematic monitoring system.

Pham Chi Lan Economist

According to Mrs. Lan, having approached 21 years of experience in SOE governance in Vietnam and the experience of other countries in managing the state economy, Vietnam approach many good practiccal lessons in the world but we did not learn or succeed as they did.

"The SOEs take benefit, and the losses government have to bear, the risks are not the problem with SOEs". With the inspection agency, nomarlly considered the whole political system to the SOE monitoring, but that's reason why no one can monitor and take responsibility”, Lan said.

According to Mr. Pham Duc Trung, Head of the Corporate Development and Reform Board (CIEM), in the period 2011-2016, the proportion of SOEs’ losses has not decreased. Consolidated report for 2016 showed that 23/91 corporations, parent companies and subsidiary company - accumulative loss is over 17 trillion dong.

In addition, investing in other sectors of corporations up to tens of trillion VND has so far not recovered and the actual value of many projects are below the value of investment. Efforts to deal with poor projects and enterprises have not been effective yet, and slow recovery.

Beause of SOEs monitoring is not effective. The first reason is the legal system. That means overlap between the supervisory function of the owner and the inspection and control activities under the state management function. On the other hand, the detailing regulations about methods and tools of supervision by the owner's representative agency are not clear and confused when implement.

The second is in the apparatus, tools and implementation methods. For example, in the implementation, the supervisory authority do not have enough information, the authenticity is not high...

PhD. Nguyen Dinh Cung, Director of CIEM, said that: The supervision of the owner's representative must be free of business and creative. In Vietnam, the owners of enterprises are the ministries that "embrace" both the management function of the sector and the policy, lead to deviated and distorted development, do not realize the weakness of SOEs from the beginning to improve.

"Business owners must recognize what their business does, not just look at reports, and subjective ideas. At this time, we must quickly stabilize the SOEs governance system to use effectively resources for development" Mr.Cung said.