Success and costly lessons of State-owned enterprise (SOE)
25/1/2016 16:22' Send story Print story

Many groups, corporations, state-owned commercial banks play a significant role in stabilizing macroeconomics, participating defense and security mission, combining the economic development with the mission of  ensuring the defense, security, national sovereignty and the implementation the policy of social security, remedying the effects of natural disasters.

However, due to the global economic crisis, our economy as well as SOEs have faced many difficulties. The overextension of operating scale with multi-businesses has led to the unfortunate collapse of some groups, corporations and enterprises. Labor productivity and production-business efficiency remain low and provide less contributions commensurate with the resources that’s SOEs that SOEs hold. Some SOEs have been weak, unprofitable, negative, corrupt, and wasteful, made significant loss of state owned property and caused annoyance to the society. The results of SOE restructuring are modest. Many critics and criticisms to SOEs have been raised. The voices calling for equitization, privatization and even dissolution of SOEs have been increasing. SOEs are facing a great challenge when our economy widely and deeply integrates into the global market and under an increasing pressure of public opinions.

With the aim of finding an explicit answer for the exit for SOEs, the book “Success and costly lesson of state-owned enterprises” by Assoc. Pro, Dr. Le Quoc Ly, released by the National Political Publishing House in 2004, collects and systematizes articles and intensive analysis of Vietnam’s leading scholars, scientists as well as leaders of SOEs. The book focuses on analyzing and highlighting successes and shortcomings of SOEs and problems should be renovated and reformed in order to develop SOEs, focusing on the following issues: the difficulties caused to SOEs by institution and economic institution hindering SOEs; the role of SOEs in Vietnam’s economy: theory, practice, and problems; the relationship between State and SOEs in Vietnam; model to implement the right of state ownership; model to implement representative function for state ownership of SOEs,…

Also, the book mentions specific problems of SOEs such as: privileges of state economic corporations; the failures of Vinashin and Vinaline and the lessons learned; the successes of Vinamilk, Hau Giang Pharma; financial management of SOEs and loopholes in management; problems in use of leaders and human resource management in SOEs; profound reasons of low productivity and efficiency; blocked points in the economy causing difficulties for SOEs, interest groups dominating the operations of SOEs,…With such contents, the book is structured in three parts:

Part I : “Reform of awareness of SOE in the market economy”, focuses on analyzing, assessing the role of SOEs in the market economy in Vietnam and international integration, contributing to clarify the changes in awareness, management mechanism and restructuring SOEs, thereby untie the knots step by step and gradually help the SOEs to develop.

Part II: “Reform and restruction of the SOEs - practical benefits”. The articles in this part provide significant successful examples of Vietnamese Vinamilk joint stock company (VNM) and Hau Giang Pharma (DHG); costly lessons from the failures of Vinashin and Vinalines; the equitization of SOEs in the period of 2014- 2015; the real situation of restructuring and reforming SEOs in general and in each locality and each area, such as Ho Chi Minh City, the bloc of central enterprises, etc. Thereby, the authors point out that the issues of SOEs which need to be reformed and improved, focusing specifically on the following issues: institution and economy institution, financial management, leadership and human resource management, science - technology, structuring and other benefits.

Part III: “Proposals and recommendations”. On the basis of analyzing management and administration model of SEOs on ownership, capital management and experiences of reforming SEOs of other countries, particularly those who share similarities in the economy like China, Korea, Russia and Eastern European countries, the papers of this part have proposed several reformed polices and mechanisms for SEOs as well as provided the favorable, opening and effective business environment for the growth of SOEs, for examples, transparence of information about SOEs, accountability and monitoring responsibilities of the State toward SOEs, applying of the modern corporate governance for Vietnamese SOEs.

Obviously, the analysis to clarify the causes of the shortcomings and weaknesses in the operation, finding the appropriate solutions, enhancing the operational efficiency, further promote the roles of State-owned enterprises are the core issues which are not only urgent in the short term but also have strategic significance for the State and the Party. Therefore, this book, which provides the articles with intensive scientific analysis from various perspectives about the practice of SOEs, the causes of successes, failures and solutions to enhance the performance of SOEs, makes a huge contribution for the comprehensive study of the State-owned enterprises’ operation in the past and provides an important foundation for the State and the Party to assess, to recognize and to adapt the current restructuring and equitization of enterprises.

Bui Thanh

Translator: Hoai Linh/ Proofreader: Vu Thanh Van

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