Vietnam's SOEs make sacrifice in inflation fight: PM Dung

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Some of the losses that state-owned enterprises incurred were due to their attempts to keep prices stable and to rein in inflation, Prime Minister Nguyen Tan Dung said Thursday.

He said state utility Electricity of Vietnam, for instance, had to sell power below cost to help control inflation. "Such losses were caused by policies and should be assessed separately from losses resulting from other investments," he told a conference in Hanoi.

Dung said state companies and banks have contributed a great deal to the economy. State-run lenders, in particular, made it possible to implement monetary polices and to maintain stability for the market this year.

However, he admitted that some state-owned companies failed to operate effectively, and the sector needs to be restructured.

According to the Ministry of Finance, several enterprises including Electricity of Vietnam, the Vietnam National Shipping Lines, the Vietnam National Textile and Garment Group, and the Vietnam Housing and Urban Development Group, together, incurred losses of more than VND26 trillion (US$1.24 billion) at the end of 2010.

"It's necessary to identify which (state-owned) companies need to be equitized and which should be retained," Dung said. "Vietnam Oil and Gas Group, for example, will not go through equitization in the next five years, as it has to fulfill its task of ensuring energy security."

The government, on the other hand, will withdraw from companies in which it does not hold a controlling stake of 50 percent or more, he said.

The process of equitization, or selling shares, at state-owned companies in Vietnam started slowing down during the global financial crisis.

Dung said in a report sent to legislators late last month that the government will accelerate share sales at state-owned enterprises, aiming to retain stakes only in those that are really important. He also said state groups and corporations will have to complete withdrawing from investments in non-core sectors by 2015.

According to a plan announced at Thursday's conference, 692 out of 1,309 state enterprises will remain owned by the government, and they will be organized into 44 large groups and corporations by 2015. Other companies will be equitized, restructured or dissolved.

Under the plan, the government will only control companies in security and public service sectors.

State enterprises made a combined profit of VND162.9 trillion ($7.7 billion) at the end of 2010, posting revenues of VND1,488 trillion ($70.8 billion).

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