“In recent times, state-owned enterprises (SOEs) haven’t been contributing as much as they once did,” said Phan Van Mai, Chairman of the People’s Committee of Ho Chi Minh City, at last week’s national conference to address SOE production, business, and investment improvements.

In Ho Chi Minh City alone, there are almost 50 SOEs. As of July, these enterprises boasted total assets of $4.43 billion with an equity capital of $3.16 billion. Their collective revenues for the first six months stood at $1.33 billion, with a profit of $205 million.

Harnessing the vast resources of these SOEs is imperative for Ho Chi Minh City’s economic growth, Mai stressed, adding that the private sector, inclusive of both private domestic groups and foreign direct investment, have also been expected, and even tasked, to stimulate economic growth.

Such a predicament is not solely Ho Chi Minh City’s cross to bear. The decline has echoes globally, influenced by international economic instability, political turbulence, and domestic operational challenges.

Aggregate revenue forecasts for the nation’s near-850 SOEs anticipate a sum of $59.78 billion this year, marking 4 per cent more than projections. Similarly, pre-tax profits are expected to rise 9 per cent, with a 7 per cent uptick in contributions to state coffers compared to the annual plan.

Yet, as Minister of Finance Ho Duc Phoc said, compared to 2022, this year’s revenue for SOEs represents just half of the previous year’s figure, with a 47.3 per cent decrease in pre-tax profit and a 32.9 per cent reduction in fiscal contributions. To provide context, 2022’s figures reflected a 29 per cent surge in revenue and a 24 per cent uptick in pre-tax profit over 2021.

The diminishing contribution is not merely a product of tougher business climates. Deputy Minister of Planning and Investment Tran Duy Dong hinted at a less than optimistic outlook for the next five years.

“The sluggish pace of new projects for SOEs has not provided the anticipated boost in capacity. Presently, they contribute about 29 per cent to the nation’s GDP,” Dong added.

Voicing his concerns to the prime minister, chairman of Vietnam Electricity (EVN) Dang Hoang An noted that even though EVN’s investment this year ranked among the top of all SOEs, totalling $2.32 billion in pure investments and $4 billion inclusive of debt repayments and interest, it still pales in comparison to previous years.

Furthermore, he highlighted the slow pace of fund disbursement so far this year, putting pressure on the rest of 2023.

“The prime minister’s emphasis has been on leveraging the resources within SOEs, bringing these resources swiftly into the economy,” An said. “The only way forward is increased investment. However, the current regulatory framework stands as a significant barrier.”

In the energy sector, An noted that the existing investment procedures are overburdened with bureaucratic red tape, leading to sluggish decision-making.

“Every economic group has its decree from the government, coupled with another decree for financial management. With these regulations and more, it’s challenging to function,” he said.

And even if these bureaucratic knots are untangled, the progression of many tasks hampers efforts. The Ministry of Planning and Investment reports that approvals are going slowly for restructuring projects, strategies, and business operation plans for 2021-2025.

To date, a plethora of Vietnamese premier SOEs remain in anticipation, as their strategic and operational roadmaps have yet to receive the nod from the Prime Minister’s Office.

The State Capital Management Committee, the body tasked with supervising enterprise operations, has green-lit the restructuring blueprints for a mere four enterprises: Vietnam Oil and Gas Group, the Vietnam Forestry Corporation, Vietnam Airports Corporation, and Vietnam Maritime Corporation.

Telecoms behemoth Viettel stands out as an exception in this quagmire. Despite being the lone player with an endorsed business strategy, its chairman and CEO, Tao Duc Thang, has voiced his concern.

“The delays cast a long shadow over our entire operational framework and our investment prospects for the foreseeable future. In the absence of a strategic compass, we’re essentially navigating blind,” Thang said.

Thang believes that SOEs’ total assets, which amount to over $160.34 billion operating across various sectors, could be put to better use. “If we can synergise these resources, the enterprises can contribute more significantly to the economy. For instance, Viettel and EVN recently collaborated to expedite the Thai Binh 2 thermal power plant’s operations,” he said.