Restructuring state-run enterprises

The process of restructuring Vietnamese enterprises has been going on for the past decade. As a result, the number of ineffective enterprises has reduced from 60% in 1991 to 20%. The existing 12 state-owned economic groups which account for one-third of total social investment but contributes only 27% to 28% of the country’s gross domestic product. To address this problem, it’s necessary to restructure SOEs, promote equitization, renew investment policies, and better manage capital resources to ensure business efficiency, according to economist Nguyen Minh Phong: "The economic restructuring process is flexible. In the coming year, we should focus on production activities with production businesses the first to be restructured. The economic groups will have to scale down their investment to focus only on profitable fields."

At a seminar to review the performance of economic conglomerates early last month, government cabinets and economists agreed that the restructure should increase the efficiency of SOEs, not eliminate this economic model. Prime Minister Nguyen Tan Dung told the seminar: "State-owned enterprises are needed to perform tasks assigned by the government to ensure the macro economy. At the same time, they are urged to make a profit."

At the government’s regular meeting last December, regarding a scheme to increase the efficiency of the State-owned enterprises, PM Dung said the restructure will help state-owned enterprises perform their key of supporting socio-economic development, stabilizing the macro-economy, and balancing the economy. Mr. Dung said: "The scheme should clearly define the fields the SOEs need to involve. For the enterprises, which the state governs between 65 and 70% of capital, it is necessary that they have to focus their investment on their mandatory activity rather than involving in banking, insurance and real estates businesses."