Vietnam may have new agency to manage state enterprises

By Anh Vu, Thanh Nien News

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A ship of state-owned Shipbuilding Industry Corporation, formerly Vinashin. The company was restructured in 2013 amid corruption and debt scandals. Photo: Ngoc Thang/Thanh Nien A ship of state-owned Shipbuilding Industry Corporation, formerly Vinashin. The company was restructured in 2013 amid corruption and debt scandals. Photo: Ngoc Thang/Thanh Nien

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The Vietnamese government is considering setting up a new agency to manage state-owned enterprises more effectively, but some economists have questioned the necessity of such a plan. 
If the plan goes through, this will be the second agency after the sovereign fund State Capital Investment Corporation (SCIC) to manage Vietnamese SOEs, whose combined assets were estimated at nearly US$250 billion.
The new agency will take over companies which are directly under the management of ministries and government agencies, while SCIC will manage the rest, according to the plan being prepared by the Central Institute for Economic Management. The institute reports to the Ministry of Planning and Investment.
The establishment and operation of the new agency will be discussed by the government before the final plan is submitted to the National Assembly next month for approval, Nguyen Dinh Cung, chief of the institute, told Thanh Nien.
The new agency is "urgently" needed, considering SOEs lack transparency and are not managed efficiently, with many costly but unsuccessful projects going bankrupt, Cung said.
However, the plan has drawn criticism from several economists who dismissed the plan for another manager of state holdings as "unnecessary."
Economist Ngo Tri Long urged the government to consider the plan thoroughly, arguing that a new agency means more resources for administration, which goes against the goal of reducing public spending. 
Figures from the Ministry of Finance show that the government's expenses were VND376.62 trillion ($16.66 billion), or 44.2 percent of the total spending in 2010. The ratio jumped to over 70 percent last year when the expenditure was estimated at VND704.4 trillion ($31.16 billion).
Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors, said the government should focus on speeding up selling stakes in state-controlled businesses.
Or it can just give SCIC more power to save money and time involved in establishing a new agency, Hai said.
SCIC now has stakes in 197 companies which have a combined market value of nearly VND95.7 trillion ($4.22 billion), local media recently reported.
The fund reportedly earned around VND5.06 trillion ($223.42 million) in dividends last year, or nearly half of its revenue which also included proceeds from selling shares.
Latest official figures show the combined revenues of 781 businesses owned wholly or partly by the government grew only 1 percent in 2014 to VND1,709 trillion ($75.61 billion). Their net profits fell 1 percent to nearly VND187.7 trillion ($8.3 billion).

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