VietnamNet Bridge - “It is good news that Vietnam’s national economy is recovering after a downturn, but I don’t think that the recent achievements are because we have successfully fixed the problems of the economy”, noted former Minister of Planning and Investment Tran Xuan Gia.

In a recent interview with Thoi Bao Kinh Te Vietnam, he said:

“The biggest problems of Vietnam’s economy are still present and have become more serious due to the impact of the global economic crisis.

Vietnam’s economic growth has been relying on investment capital increases, but the investments have low efficiency.  The industrial value increase is relatively high, but the added value remains low, previously 1,3-1,4%.  Industrial value increases would create 1% of added value increases. Now we need 2% industrial value increase to obtain the same added value increase.

The recent economic growth is based on temporary solutions, which may bring many additional side effects.”

The year 2010 performed the way you anticipated: The inflation rate was high, the dong-dollar trade fluctuated, the environment has been polluted. Where will this problem lead us?

It will take several years to “cure” short term diseases while it will take longer to treat long term ones. But we need to start immediately. I agree with domestic and international economists that the top priority task is to stabilize the macro economy.

State-owned enterprises (SOEs) are believed to have low business efficiency, even though the capital flow to the economic sector has been very large. Do you think that this is one of the factors that hinder economic growth?

Statistic shows two noteworthy matters: First, the growth rate obtained by SOEs is always lower than the average growth rate of the national economy and lower than that of non state owned enterprises and foreign invested enterprises.

Secondly, in the years when Vietnam bore the impact of the global economic crisis, the state economic sector saw a deeper recession than other economic sectors. This means that SOEs still cannot fulfill a leading role in the national economy as expected by the state.

For instance, in 2009 while Vietnam’s GDP grew by 4,8% over the previous year, the growth rate of the economic sector was only 2,6%. Meanwhile the figures of the non state economic sector and the foreign invested economic sector were 4,2% and 17,6%, respectively.

So what should we do to fix the legal “hole” in SOEs’ asset management?

SOEs were managed by the law on state-owned enterprises until July 1^st, 2010 when the Enterprise Law took effect.  Meanwhile state-owned economic groups have been covered by the Decree No.101.

However, there still are big legal loopholes in SOEs’ asset management . We still do not have any legal documents to manage the huge assets of the state SOEs.

Who are the real owners of the huge assets? All localities and ministries claim their right to get involved in asset management. Therefore there are too many owners of SOEs’ assets, as a result the assets become ownerless.

A lot of important legal documents are still missing. For example, there are still no regulations stipulating Vinashin’s operation. It is quite a surprise that such a big economic group still doesn’t have these necessary regulations.

So I have the following suggestions. First, it is necessary to have an agency specialized in managing SOEs’. The agency needs to be powerful enough to implement the task of supervising and managing SOEs’s state ownership.

Second, it is necessary to redefine the purpose, strategy and mission of economic groups in the next 5-10 years.

Third, it is necessary to revaluate SOEs’ assets and restructure SOEs.

Fourth, it is necessary to set up information administration and monitoring systems.

Fifth, it is necessary to apply a transparent information exposure system like listed companies. SOEs should be required to submit audited finance reports.

Source: Thoi Bao Kinh Te Vietnam