Socialist Republic of Vietnam

HA NOI ( June 5, 2003)— National Assembly deputies want to give State-owned enterprises more autonomy to make them more efficient.

Many deputies, who were debating proposed changes to the law governing SOEs in Ha Noi on Wednesday, agreed it was time to free SOE from what they argued were the too many tiers of management both at the centre and in localities.

Deputy Hua Duc Nhi, Thai Nguyen Province, said: "SOEs are overwhelmed by managerial interferences from many different Government agencies."

His opinion was echoed by delegate Le Duc Thuy, Nghe An Province and State Bank governor, who said it was a fact that too many managerial orders were making SOEs sluggish.

Thuysaid SOEs will never swim on their own if they continue to be hamstrung by interference to business and management decisions such as personnel promotion and company organisation.

Some deputies said the updated law should clearly define the rights and responsibility of SOE owners – ministries, provincial and city people’s committees – and dispense with the managerial role of local departments.

The new SOE Law is intended to improve the efficiency and effectiveness of the enterprises.

It focuses on providing more rights and duties for SOEs in doing business according to approved development strategy and assigning the administration board to represent the State ownership in the enterprises.

The new law will create the legal foundation for the development of the parent and subsidiary company and limited business models for SOEs.

Those writing the law are attempting to clear all the obstacles identified in the application of the SOE Law during the past eight years; legalise effective solutions devised during the process and create a fair business environment for all enterprise.

Deputies said that a cumbersome management system had made SOEs less flexible in doing business and this had caused huge losses to the State Budget.

Viet Nam now has about 5,200 SOEs or about half the number of 1990 when the country embarked on its process of renovation.

Deputies discussed the proposed law as it would apply to a SOE parent and subsidiary – a model seen as one of the most effective ways of restructuring ailing State enterprises.

Representative Nguyen Ngoc Tran, An Giang Province, said he was worried that the new law would cut corners in the development of this business model.

In the market, the model could only be successful with a strong parent company that was capable of directing its subsidiaries but most Vietnamese corporations were financially dependent on their subsidiaries.

Tran said: "We need to follow the economic rules and although we want to accelerate the restructuring of SOEs, the cutting of corners is not an appropriate solution."

Many delegates wanted the new law to eliminate preferences for SOEs to create a fair business environment.

They suggested that it should add the value of land-use rights to the capital costs of SOEs in fairness to other enterprises that – unlike SOEs – had to hire land for their businesses.

Nguyen Ngoc Tran said: "It’s necessary to separate apparent State administration from business management. Vagary about this is an ideal place corruption and other negativity to fester."

The newly revised SOEs Law should not be much different from the enterprise and foreign investment laws as the country integrated with the international economy, he added. — VNS