The financial picture of State-owned enterprises (SOEs) has shown bright and dark sides through the supervision results of State capital investment and finance of enterprises in the first six months of 2020.

In the first 6 months of 2020, Military Telecommunications Group of VND 65,736 billion,
growing by 52.64% compared to the first six months of 2019. Source: ST

Profit after tax is nearly VND 66 trillion

The results of financial supervision of enterprises with 100% State capital belonging to ministries and government agencies in the whole country in the first six months of 2020, showed that the total revenue of 141 enterprises is VND 455,698 billion. In which, some enterprises have large revenue like the Military Telecommunications Group of VND 65,736 billion, growing by 52.64% compared to the first six months of 2019; Vietnam Post Corporation is VND 11,599 billion, increasing by 1% compared to the first six months of 2019; Vietnam Posts and Telecommunications Group is VND 21,018 billion; Mobifone Telecommunications Corporation is VND 12,579 billion. The total profit after tax of these 141 enterprises is VND 34,229 billion, of which, some high-profit enterprises like Military Telecommunications Group are VND 19,647 billion, an increase of 4.28% compared to the first six months of 2019.

According to the Ministry of Finance, these enterprises have also paid the budget for the first six months of 2020 is VND 54,222 billion, of which, Military Telecommunications Group is VND 20,053 billion, rising by 18% compared to the first six months of 2019; State Capital Investment Corporation (SCIC) is VND 3,887 billion, up by 71.8% compared to the first six months of 2019; Vietnam Posts and Telecommunications Group is VND 2,438 billion; Mobifone Telecommunications Corporation is VND 1,706 billion. Also in the first six months of 2020, 119 business units made a profit, 19 business units made a loss and the total loss in the first six months of 2020 was VND 980 billion, the remaining businesses did not report profits and losses. A remarkable number in the report is that, among these 141 enterprises, 17 companies are considered unsafe by their owners and show signs of financial insecurity.

For enterprises with more than 50% of charter capital held by the State (28 enterprises), the Ministry of Finance said the total revenue of these enterprises is VND 229,484 billion, the total profit after tax is VND 21,011 billion and these firms also paid VND 11,062 billion to the State budget. Among the 28 enterprises mentioned above, there are 19 profitable business units and seven operating at losses, with the total loss in the first six months of 2020 VND 6,433 billion.

Many businesses suffered huge losses

Regarding 19 companies with a high number of losses in the first half of 2020, according to a report of the Ministry of Finance, the Vietnam Railways Corporation lost VND 171 billion dong. The main reason is that the situation of production and business activities in the first six months of 2020 was affected by Covid-19 pandemic and the implementation of construction of essential construction items of the Hanoi - HCM City railway line, leading to decrease in revenue, a deep decrease compared to the performance of 2019 resulted with a significant reduction in the output of railway transportation management services, traction services and supporting technical services for transportation provided by the corporation to transportation companies. Also during this period, Vietnam National Shipping Lines lost VND 76.9 billion. The reason is due to the Covid-19 pandemic, low efficiency of shipping production and business activities, a decrease in transportation demand, a reduction in term rental activities, an increase in self-exploitation, and the lockdowns of countries to prevent pandemic also increases costs. The Vietnam Coffee Corporation lost VND 36 billion. The big reason is that the impact of the Covid-19 pandemic has made the price of coffee fall even more because major coffee consuming countries such like the US, Germany, UK, France, Switzerland, Spain, and Japan, South Korea have been implementing social distancing, with large shopping centres and coffee shops closed.

Vietnam Chemical Group also faced a loss of VND 654 billion. The main reason is due to low revenue from divestment and dividend collection from companies and additional provision for bad debts for Ninh Binh Fertilizer One Member Limited Liability Company, provision for investment loss for the investment capital in DAP Joint Stock Company - Vinachem.

Regarding how the owner agency will supervise the State capital in enterprises to ensure efficiency, discussing with the press at the workshop on amending the Law on Management and use of State capital invested in enterprises. Dang Quyet Tien, Director of the Enterprise Finance Department (Ministry of Finance) said the orientation for amending and supplementing the Law on Management and Use of State Capital for Investment in Production and Business at the enterprise. Law No. 69 is that the owner will supervise as a major shareholder of the state as well as other private shareholders, shareholders only care how much the capital invested in the enterprise after one year increases, how much benefit is obtained, all operating activities of the enterprise must be decided by the enterprise. Once a shareholder, the owner does not have to care about management of the enterprise, only cares about whether the management is transparent or not, and the firm has the full right to decide the amount of capital invested in the business. Many projects, including effective projects and inefficient projects, but in general, the investment capital must be fully recovered.

"This will create autonomy for the operation of enterprises, as businesses are not afraid anymore because now businesses are worried about being prosecuted for responsibility if they do not preserve capital. However, it should be noted that the management system of enterprises must be transparent. To do this, it must take time to carefully review and ensure uniformity, if it is too clearly defined without monitoring, inspection and management system, without publicity, transparency and accountability, this will create loopholes," Tien noted.