Vietnamese lawmakers discuss cutting preferential treatment for state firms

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National Assembly members and economists are suggesting that Vietnam equitizes large state groups and reduces loan guarantees to state owned firms in an effort to prevent financial resources being squandered on loss making businesses.

During the ongoing NA session, many deputies have expressed concern over the ineffective operation of many state-owned firms.

They have proposed a stop to preferential policies for state-owned firms and the closure of those that are making losses.

Recent statistics compiled by the Ministry of Investment and Planning show that around 12 percent of state-owned firms are making losses every year.

Deputy Mai Thi Anh Tuyet from the southern province An Giang suggested "pushing the process of equitizing state firms to use state budget more effectively and to stabilize the macro economy."

Tuyet said the process needs the government to restructure public investment and the banking sector as well.

Be Xuan Truong from the northern province of Bac Kan also called for a stop to loss-making state firms.

"State corporations which have made losses for many years should announce bankruptcy and a stronger group chosen to replace them," Truong said.

Several deputies said the government should manage its loan guarantees better so that it is not saddled with huge losses made by mismanagement of state owned firms like shipbuilder Vinashin.

Deputy Truong Thi Hue from the northern province of Thai Nguyen said the government should set up measures to better manage state owned firms that are receiving loan guarantees worth a total of VND412 trillion ($19.65 billion) this year and VND532  trillion ($25.38 billion) next year.

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She asked the government to publish the list of firms that receive guarantees every year so that the National Assembly can supervise their operations.

Hoang Dang Quang of the central region's Quang Binh Province said "The government should minimize their loan guarantees to state firms."

Quang said the government should carry out a review to find out which state-owned enterprises are making losses in order to make them focus on their main business or to turn them into private firms.

In a report sent to deputies over the weekend, the NA Economy Committee also said that it's time the government stops placing state firms in a position of priority.

The report suggested that a more level field be created for state and private sectors, in which the former will have to publish details of all their operations under the same set of requirements used for all listed firms.

Also, the state firms should be cut from all preferential treatment such as special funds, special access to natural resources, planning investment, special contact with policy makers, and long-term loans, it said.

The committee also called for opening up several markets currently occupied exclusively by state firms, in order to create a more competitive environment.

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