Photo: Duc Anh
Success will depend on the details, World Bank adds.
The World Bank has applauded Vietnam’s idea of setting up a “super committee” to supervise assets owned by State-owned enterprises (SOEs), which are estimated at around $227 billion.
The success of the idea, however, will depend a great deal on the structure of the committee and the detailed plan of action from relevant agencies and the government, according to Mr. Sebastian Eckardt, Economist at the World Bank in Vietnam.
The Ministry of Planning and Investment floated the idea of setting up the super committee on July 15, which will manage and maximize the benefit from all SOE assets nationwide. Total State assets and investments by SOEs have been estimated at VND5,000 trillion ($227 billion) by MPI.
“We believe this is an important step towards the separation of ownership and the regulatory functions of the State as it may bring out the full potential of those productive assets that are currently under the control of the State,” Mr. Eckardt said at the World Bank’s press briefing on Vietnam’s economy on July 19.
But, he added, “success will depend very much on the way the government does this, given the examples of where it has not succeeded in other countries.”
MPI believes the super committee would improve the management of SOE performance while maximizing the value of the major State assets they own.
According to Mr. Eckardt, the impact of a super committee would be felt in ownership and regulation. On the ownership side, it allows the government to focus more directly on value maximization and ensuring there is proper management over the performance of SOEs.
On the regulatory side, it would avoid potential conflict and ensure more independent regulation of markets where SOEs and private enterprises may potentially compete and where the government must be seen to be independent.
“In case there is a potential conflict, there is a need for a level playing field and that will be much easier if there is separation of ownership,” he added.
Nine corporations and 21 enterprises would be managed by the super committee, including the Vietnam Oil and Gas Group (PetroVietnam), the Vietnam National Coal- Mineral Industries Holding Corporation Limited (Vinacomin), the Vietnam Posts and Telecommunications Group (VNPT), the Vietnam National Petroleum Group (Petrolimex), Bao Viet Holdings Insurance Company (BaoViet), Saigon Alcohol Beer and Beverages Joint Stock Company (Sabeco), and Airports Corporation of Vietnam (ACV), among others.
The State Capital Investment Corporation (SCIC) under the Ministry of Finance (MoF) is expected to also fall under the management of the super committee. For all intents and purposes SCIC has itself been a super committee, managing over 500 enterprises and representing State capital and investments in key sectors.
The super committee will be under the government’s supervision and will not have the function of introducing regulations but will be responsible for the effectiveness of using State assets and investments in SOEs.
The idea has been floating around in Vietnam for a long time but the details are still to be thrashed out. It was first discussed at the 13th National Assembly regarding the Law of Investing State Capital in Enterprises, in November 2014.
According to MoF, SOEs divested nearly VND2.3 trillion ($104.5 million) from their non-core businesses in the first half of 2016, gaining VND4.5 trillion ($204.5 million) in return. SCIC sold VND1 trillion ($45.5 million) in SOE stakes, gaining VND2.9 trillion ($132 million).
Doubts have been expressed about the ability to manage State assets in SOEs since the corruption case that engulfed Vietnam National Shipping Lines (Vinalines). In 2014 Vinalines, under the Ministry of Transport (MoT), reported total losses of VND21 trillion ($955 million). It remains the higher ever debt of an SOE, according to Moody’s Investors Service.