State enterprises told to hasten restructuring

State-owned Electricity of Viet Namworkers install equipment. The Prime Minister has urged swifter progress on the restructuring of State-owned enterprises in order to improve their operational efficiency. — VNA/VNS Photo

HA NOI (VNS)— Prime Minister Nguyen Tan Dung is urging swifter progress on the restructuring of State-owned enterprises in order to improve their operational efficiency and transparency and enhance their role as drivers of the national economy.

At a conference yesterday between Government officials and representatives of major State-owned enterprises, Dung emphasised the important roles of State-owned enterprises (SOEs) as a force helping the Government to regulate and stabilise the economy.

He called on the sector to bring its strengths into full play and overcome shortcomings in order to continue playing their unique role in and contributing to the economy.

Dung said the Government would focus on tackling difficulties facing these enterprises, especially those related to regulatory burdens.

Dung also asked State-owned economic groups and corporations to verify their business plans for the year to ensure efficiency, while hastening the restructuring process and continuing to withdraw capital from non-core lines of business according to established timetables designed to minimise negative impacts.

The transparency of SOEs must also be increased together with efforts to reduced costs, he said, promising policies and incentives that would expansion projects and new investments in the country.

A Ministry of Industry and Trade report has shown that earnings of 73 leading State-owned firms declined last year by 95.8 per cent, compared to the previous year, while tax collections from these enterprises fell by 79 per cent.

SOEs contributed an estimated 30 per cent to gross domestic product (GDP), generated 39.5 per cent of the nation's industrial value, and were responsible for about half of export turnover – all while providing about 1.2 million jobs with average monthly income of VND3.5-5 million (US$167-240).

"Therefore, SOEs' declining targets for earnings, profits and tax contribution might have negative impacts on the economy," the ministry said.

According to a 2012 report by the National Steering Committee for Enterprise Innovation and Development, earnings of SOEs last year reached just VND1,621 trillion ($77.56 billion) – 8 per cent lower than had been targeted and an increase of just 2 per cent over 2011. Pre-tax profits fell by 5 per cent and contributions to the State budget fell by 12 per cent compared to the previous year, the report said.

Meanwhile, these firms ended the year with total accounts payable of more than VND1,334 trillion ($63.5 billion) and with debt burdens that exceeded permitted limits in some groups and corporations.

The total value of State equity in these companies also rose by only 1 per cent last year, compared to a 9-per-cent-pace in 2011.

The committee's vice chairman, Vu Viet Muon, attributed the slowdowns to the impact of the global economic downturn, high lending interest rates, and the limited management capacity of some economic groups and corporations.

While some reported good business results, including the telecommunications giant Viettel and State-run oil giant PetroVietnam, many continued to encounter difficulties, including the Viet Nam Rubber Group, the Vinacomin Group, and the Northern Food Corporation.

PetroVietnam has called for new financial regulations to ease business operations and management, while Vinacomin has petitioned for support from the Government on tax policies, saying current taxes and fees were burdensome and lowering competitiveness. Viettel was also urging the Government to create advantageous conditions for enterprises to invest overseas.

Meanwhile, the Southern Food Corporation proposed the Government encourage temporary storage of rice in the first quarter of this year in light of the slowdown in export orders in the first quarter and inventories that might reach as high as 3.2 million tonnes.

According to the Ministry of Industry and Trade, 2013 would continue to be a difficult year with declining consumer purchasing power, making SOEs more cautious in their planning for this year. — VNS