Vietnam's government said state-owned enterprises are now required to disclose their financial statements, as the country seeks to raise the competitiveness of the public sector and boost investor confidence.
State-owned companies will have to report their quarterly and annual financial reports, investment returns and level of state ownership on their websites, or face fines, Deputy Prime Minister Vu Van Ninh said in a directive obtained by Reuters on Wednesday.
Information disclosure by businesses in the defense and security sectors is subject to the prime minister's discretion, Ninh said in approving a government project for improving corporate governance in line with market economy rules.
The directive was signed on Monday with immediate effect.
Many state-owned enterprises (SOEs), which take out most of the bank loans in Vietnam, have been losing money, while government reform to diversify state ownership via privatization has been slow, upsetting investors.
Donors, foreign investors and government officials agreed that Vietnam needed to focus on speeding up the restructuring of the banking sector, SOEs and public investment as Vietnam's economy has stabilized, they said at a meeting early this month.
"Banking sector and SOE reforms were noted as those needing the utmost attention," the World Bank said in a statement on June 5 at the close of the Consultative Group meeting, where attendants discussed the roadmaps for reforms in the two areas.
The debt of SOEs was near $20 billion as of September 2011, or 16.9 percent of the country's total loans at the time, Finance Ministry data showed.
Bad debt has risen to 10 percent from 6 percent of the total loans in Vietnam's banking sector, central bank governor Nguyen Van Binh was quoted as telling the National Assembly last week, without giving any timeframe.
In late November, Binh has said bad debt at the end of 2011 would be 3.6 to 3.8 percent of loans, up from 2.14 percent at the start of last year.
Vietnam's economic growth slowed to an annual pace of 4 percent in the first quarter of this year, the lowest in three years.
"The slowing of the economy has forced the Vietnamese to evaluate the effectiveness and efficiency of their investment, for both the public and private sectors," HSBC said in a report on Monday.
"SOEs continue to pose a drag on the economy, making up more than 60 percent of total investment but lagging behind in performance," the report said.
Coupled with high interest rates, banks having tightened lending in the past year to avoid bad debt, which has slowed the country's lending. On Monday the central bank cut its key interest rates for the fourth time this year to help spur economic growth.