Pham Viet Muon, Vice Chairman of the Government Office and
deputy head of the National Steering Committee for Enterprise Renovation
and Development, sheds some light on the implementation of the
government’s state-owned enterprise (SOE) restructuring project
2011-2015.
How is the execution of the project to date?
Restructuring SOEs actually began before the enactment of the project. I mean part of the work mentioned in the project was earlier deployed. For instance, 18 out of 21 restructuring plans of major state groups and corporations were submitted and are in the process of garnering inputs from relevant state agencies.
Many policies subject to be revised are now under consideration like the decree on management and supervision of state groups and corporations, the regulation on the rights and obligations of state ownership at SOEs or the regulation on supervising finance and appraising efficiency of SOEs.
SOEs restructuring has been carried out constantly, but at a slow pace. When the restructuring plans for state groups were submitted, concerns about their delayed appraisals appeared, especially in view that the current market conditions could hurt these groups’ capital divestiture plans. Is that the case?
The conditions as well as requirements for restructuring SOEs were different compared to previous years. First, policies and mechanisms were modified towards enhancing production, business and management efficiency of enterprises in which the state retains 100 per cent or more than 50 per cent of their total capital. Second, the restructuring demand came from the inner of SOEs instead of being driven by the need to cut down SOEs in number.
Via the project, the prime minister required the core business lines and functions of each group, corporation and SOE to be reviewed and redefined. SOEs will be assigned with concrete tasks. Based on their governance capacity and other resources, SOEs will redefine what would be their core areas and how many of them will be the best to help them outshine in the state economic sector and the national economy.
Especially, SOE restructuring needs to link closely to technology investment and renovation, gradually removing energy intensive products. This move may trim the scope of business for a large number of SOEs, but it is of necessity.
Based on these criteria and principles, enterprises will set their strategy as well as business plans matching the new structure. Generally, SOEs must change themselves in a comprehensive manner to bolster efficiency.
Will there be big changes to the state groups and corporations’ operations?
Each SOE will experience sweeping changes. Some SOEs will undergo a shake-up as they need to alter their business strategy and business lines, divest capital or reduce their business scope. Some may only experience changes in production and management.
The restructuring project is unique as it requires SOEs to be restructured irrespective of their management authorities.
This view-point was once given, but this is the first time it is embedded in a project. Accordingly, the restructuring of SOEs, particularly state groups and corporations, must link to the restructuring of the whole economy, economic sectors and localities.
Is that why concerned ministries must appraise state groups and corporations’ restructuring plans before those plans are submitted to the premier?
Ministries and sectors take charge of revising individual plans of enterprises to ensure they match the development strategies and plans of sectors, regions and localities.
In the past, SOEs had their reshuffle plans only approved by the ministries and localities that they belonged to. This approach made every locality to have similar businesses like lottery or water supply companies.
With the new approach, concerned ministries will comment on the restructuring plans of SOEs based on sectors and localities’ development planning. Member companies of state groups and corporations may be removed to other areas to scale up efficiency. The case of EVN Telecom being transferred to Viettel is an example.
In the context capital divestiture plans face difficulties, member companies of state groups and corporations will be removed to their specific areas or undergo changes in organisational structure to help state groups and corporations concentrate on their core functions.
For example, property firms under state groups will be transferred to specialised groups before the next steps are taken. Under the project, firms operating in construction, trade, telecom, publishing, water services and urban environment will take this approach.
VIR
How is the execution of the project to date?Restructuring SOEs actually began before the enactment of the project. I mean part of the work mentioned in the project was earlier deployed. For instance, 18 out of 21 restructuring plans of major state groups and corporations were submitted and are in the process of garnering inputs from relevant state agencies.
Many policies subject to be revised are now under consideration like the decree on management and supervision of state groups and corporations, the regulation on the rights and obligations of state ownership at SOEs or the regulation on supervising finance and appraising efficiency of SOEs.
SOEs restructuring has been carried out constantly, but at a slow pace. When the restructuring plans for state groups were submitted, concerns about their delayed appraisals appeared, especially in view that the current market conditions could hurt these groups’ capital divestiture plans. Is that the case?
The conditions as well as requirements for restructuring SOEs were different compared to previous years. First, policies and mechanisms were modified towards enhancing production, business and management efficiency of enterprises in which the state retains 100 per cent or more than 50 per cent of their total capital. Second, the restructuring demand came from the inner of SOEs instead of being driven by the need to cut down SOEs in number.
Via the project, the prime minister required the core business lines and functions of each group, corporation and SOE to be reviewed and redefined. SOEs will be assigned with concrete tasks. Based on their governance capacity and other resources, SOEs will redefine what would be their core areas and how many of them will be the best to help them outshine in the state economic sector and the national economy.
Especially, SOE restructuring needs to link closely to technology investment and renovation, gradually removing energy intensive products. This move may trim the scope of business for a large number of SOEs, but it is of necessity.
Based on these criteria and principles, enterprises will set their strategy as well as business plans matching the new structure. Generally, SOEs must change themselves in a comprehensive manner to bolster efficiency.
Will there be big changes to the state groups and corporations’ operations?
Each SOE will experience sweeping changes. Some SOEs will undergo a shake-up as they need to alter their business strategy and business lines, divest capital or reduce their business scope. Some may only experience changes in production and management.
The restructuring project is unique as it requires SOEs to be restructured irrespective of their management authorities.
This view-point was once given, but this is the first time it is embedded in a project. Accordingly, the restructuring of SOEs, particularly state groups and corporations, must link to the restructuring of the whole economy, economic sectors and localities.
Is that why concerned ministries must appraise state groups and corporations’ restructuring plans before those plans are submitted to the premier?
Ministries and sectors take charge of revising individual plans of enterprises to ensure they match the development strategies and plans of sectors, regions and localities.
In the past, SOEs had their reshuffle plans only approved by the ministries and localities that they belonged to. This approach made every locality to have similar businesses like lottery or water supply companies.
With the new approach, concerned ministries will comment on the restructuring plans of SOEs based on sectors and localities’ development planning. Member companies of state groups and corporations may be removed to other areas to scale up efficiency. The case of EVN Telecom being transferred to Viettel is an example.
In the context capital divestiture plans face difficulties, member companies of state groups and corporations will be removed to their specific areas or undergo changes in organisational structure to help state groups and corporations concentrate on their core functions.
For example, property firms under state groups will be transferred to specialised groups before the next steps are taken. Under the project, firms operating in construction, trade, telecom, publishing, water services and urban environment will take this approach.
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