At the new committee’s inauguration ceremony Sunday, five ministries -- the ministries of Industry and Trade, Transport, Agriculture and Rural Development, Information and Communications and Finance -- signed memoranda of understanding transferring their right to representing state capital in 19 giant corporations to it.
The committee will represent the government in managing VND1,000 trillion ($43 billion) in state equity, equivalent to 20 percent of the country’s GDP last year.
Of the 19 corporations, one is the sovereign fund, the State Capital Investment Corporation, while the rest are those in which the government owns 100 per cent or majority stakes.
The companies are currently key players in the economy in terms of size and position.
They include major groups Petrolimex, chemical group Vinachem, Vietnam Electricity, PetroVietnam, Vietnam Rubber Group, Coal and Mining Group, and Vietnam Post and Telecommunications Group.
The remaining 11 are corporations -- MobiFone, Vietnam Tobacco, Vietnam Airlines, shipping giant Vinalines, Vietnam Railways, Vietnam Expressway Corporation, Airports Corporation of Vietnam, Vietnam National Coffee Corporation, Vietnam Southern Food Corporation, Vietnam Northern Food Corporation, and Vietnam Forest Corporation.
The establishment of the entity reflects the government’s ambition to overhaul giant state-owned enterprises (SOEs) which are often characterized by a severe lack of business efficiency.
It is also aimed at improving transparency by separating the regulatory role of ministries from their function of managing state capital in enterprises.
Previously, for instance, the Ministry of Industry and Trade was both the regulator of the power sector and the representative of state ownership of Vietnam Electricity (EVN). This gave rise to concerns over the objectiveness of the ministry’s policy-making and decisions in the power sector.
At the ceremony Prime Minister Nguyen Xuan Phuc said he wants the committee to shape itself as “a professional and modern entity.”
It definitely must not be an organization plagued by red tape or become a burden on the country, he warned.
Phuc instructed it to cooperate with the country’s leading technology companies to come up with instruments and solutions to manage state capital and assets at SOEs.
Only by adopting the latest technologies can it create a good business environment for the SOEs, he said.
Under a new government decree, the committee is mandated to draft new strategies if necessary to develop SOEs in line with the country’s socio-economic development strategies.
It also has the discretion to expand SOEs’ charter capital and use public funds to make further investments in them.
Nguyen Hoang Anh, chairman of the committee, said the committee has signed a cooperation agreement with Singaporean sovereign fund Tamasek Holdings on exchange of experience in managing capital in line with market mechanisms.
Anh, who was earlier Party secretary of the northern mountainous province of Cao Bang, said the committee’s main task in the next two years is to improve SOEs’ efficiency and ensure their development by adopting new technologies and launching new products and services with added value.
It would also deploy new strategies at SOEs and speed up their restructure, rearrangement and equitization, he said.
At the ceremony Nguyen Phu Ha, former director of the Ministry of Planning and Investment’s investment appraisal and supervision department, was named vice chairman of the committee.
Sebastian Eckardt, lead economist for the World Bank in Vietnam, told the media that the establishment of the committee is a positive initiative.
Separating the ownership and regulatory functions is important for two reasons, he explained.
Firstly, it precludes conflicts of interest in sectors where the state operates as both owner and regulator, leveling the playing field and enhancing competition between companies.
Secondly, having a dedicated ownership agency also allows the government to professionalize the management of its assets and ensure value maximization and performance while reducing potential fiscal risks, he added.