Only about 0.07% of the total number of enterprises nationwide, but state-owned enterprises (SOEs) contribute up to 7% of total assets and 10% of total capital in the market.

Currently, about 60% of social resources are concentrated on SOEs,
but the efficiency of SOEs is not adequate. Photo: Internet

Along with that, this block of businesses is contributing to creating jobs for workers, regulating and stabilizing the market when there is uncertainty. However, the development of this business sector is posing many problems such as operational efficiency, limited competitiveness, not commensurate with the resources they hold.

60% of social resources are concentrated in SOEs

According to a report by the Vietnam Economic Institute, after more than 30 years of restructuring and innovation, by 2020, the country will have about 650 SOEs.

With the process of accelerating equitization, the number of SOEs has gradually decreased, accounting for only about 0.07% of the total number of enterprises in the country, but contributing 7% of total assets, 10% of the total capital of enterprises in the market and more than 30% of GDP, not to mention the contribution of labor, employment and the role of regulating, stabilizing the market in case of instability, contributing to ensuring social security, as well as national defense - security.

However, in addition to efforts to ensure their role in the economy, the development of the SOE sector has posed many problems such as limited operational efficiency and competitiveness of SOEs, not commensurate with holding resources. Twelve big projects demonstrate the weakness of 100% state-owned enterprises in Vietnam.

According to Assoc. Pro. Dr. Bui Quang Tuan, Director of the Vietnam Economic Institute, currently SOEs contribute nearly 40% of GDP, the rest is from private and foreign invested enterprises (FDI), while about 60% of the source.

Social forces are concentrating on SOEs. From the above figures, it can be seen clearly that the SOE sector has not used capital effectively. In addition, the corporate governance mechanism is slow to innovate and is inconsistent with the practice, the openness and transparency are still limited, and the use of capital in SOEs is still weak; the application of advanced technology is still limited.

At this time, most Vietnamese industrial enterprises are still using technology that lags behind the world average from two to three generations.

Not worth the potential

Agreeing with the above points of view, Assoc. Pro. Dr. Hoang Van Hai, Director of the Institute of Business Administration (University of Economics, National University of Hanoi), said that the bottleneck in the current SOE development policy mechanism is that the legal framework is unstable and unreliable, clearly inhibiting innovation in development.

According to Nguyen Duc Trung, Deputy Director of the Department of Enterprise Development (Ministry of Planning and Investment), some large-scale SOEs operate in important and key sectors of the economy, but do not bring into full play all potentials and strengths due to a number of shortcomings and limitations.

Currently, a number of ministries are assigned to manage SOEs, but there is no specific document specifying which agency has the overall responsibility of managing the SOE system. The management and supervision system is cumbersome in terms of many regulations, does not keep up with practical requirements and is ineffective.

“SOEs still lack autonomy, which prevents SOEs from participating in venture capital investment and innovation. Besides, the performance of these enterprises is not commensurate with the holding resources; competitive capacity, especially international competitiveness remains limited. This problem stems from the fact that SOEs have not fully utilized their initiative in production and business activities,” said the Deputy Director of the Enterprise Development Department.

Analyzing more clearly on the shortcomings of SOEs, according to Nguyen Duc Trung, in the field of processing and manufacturing industries, the performance of SOEs in this sector is still very limited, making a major contribution from private enterprises and FDI enterprises. Specifically, in the electronics industry, 95% of exports come from FDI enterprises. In the textile and garment industry, Vietnam National Textile and Garment Group (Vinatex) occupies an important position but mainly uses unskilled labor, the spread and added value is not high, has not had a sustainable impact on the environment.

For the chemical industry, Vietnam Chemical Industry Group (Vinachem) mainly focuses on consumer chemicals, it does not really make much sense to play a leading role. For the steel industry, Vietnam Steel Corporation (VNSteel) has low competitiveness, high production costs, and low productivity. For the mechanical industry, state-owned enterprises are also weak. For example, Construction Engineering Corporation, Industrial Machinery and Equipment Corporation all suffered losses. The Corporation of Agricultural Machinery and Equipment (VEAM) operate not from production and business activities, but mainly from joint ventures.

Therefore, according to Nguyen Duc Trung, there should be four breakthrough solutions to consolidate and develop economic groups, corporations, and SOEs may become dominant in the future.

First, they focus on building a system of mechanisms and policies towards innovative management of the owner, creating conditions for SOEs to operate equally, proactively and compete with other businesses.

Second, boldly empower or assign tasks to a number of SOEs to develop the infrastructure to apply the sharing economy, promote digital technology development in the future with some experimental policies that have control over new products, services and business models that apply digital technology.

Third, clearly define an agency that has the overall management of the SOE system.

Fourth, create mechanisms and policies for the State or SOEs to participate in the development of fields with high technology and are capable of dominating the market and reaching the world through the use of resources. State Capital Investment Corporation or in coordination with other SOEs.