Build a flexible mechanism and "reinforce" governance for state-owned enterprises

	New solutions should be provided for equitization and restructuring of state-owned enterprises
	Cooperate to build leading and "rich in vitality" state-owned enterprises
	State-owned enterprises flourished

Deputy Minister of Finance Cao Anh Tuan, Standing Deputy Head of the Drafting Committee, spoke.

SOEs need flexible and responsive operating mechanisms

On June 12, the Minister of Finance issued Decision No. 1337/QD-BTC on establishing a Drafting Committee and Editorial Team to develop the draft Law on Management and Investment of State Capital at Enterprises.

Implementing Resolution No. 129/2024/QH15 of the National Assembly on the Law and Ordinance Building Program for 2025 and adjusting the Law and Ordinance Building Program for 2024 approved by the 15th National Assembly, 7th Session dated June 8, 2024, which agreed to add the project Law on Management and Investment of State Capital at Enterprises to the Law and Ordinance Building Program for 2024 and will be considered and commented by the National Assembly for the first time at the 8th Session (October 2024), approved at the 9th Session (May 2025), be effective from January 1, 2026.

Accordingly, the Government must develop and approve the draft Law by August 2024 to submit to the National Assembly Standing Committee at the 37th session (September 2024).

Speaking at the Conference, the Drafting Committee commented on the draft Law on Management and Investment of State Capital at Enterprises organized by the Department of Enterprise Finance (Ministry of Finance) on June 20, Deputy Minister of Finance Cao Anh Tuan, Standing Deputy Head of the Drafting Committee, said that the drafting agency and the editorial team have closely followed the purpose, guiding viewpoint and concretized the content of 6 policy groups in the proposal to develop the Law project. Hence, the draft Law includes 9 Chapters and 92 Articles.

However, Deputy Minister Cao Anh Tuan emphasized that there are still many procedures before the draft Law is submitted to the Government for approval as well as submitted to the National Assembly's Finance and Budget Committee for verification to ensure the quality of Law building documents, the Deputy Minister expressed his hope that members of the Drafting Board and Editorial Team participate and contribute specific opinions for the drafting agency and Editorial Team to absorb, complete soon, with widespread comments of ministries, branches, businesses and relevant units.

Sharing more at the Conference, Mr. Nguyen Ngoc Canh, Vice Chairman of the Committee for Management of State Capital at Enterprises, said that the reality of SOE operations shows that there are still many problems in production and business activities. “At many meetings, many SOE leaders said that the private enterprise sector looks at the resources of the SOEs, the SOE sector looks at the flexible and responsive operating mechanism of the private sector. Therefore, the issues that need to be addressed in the draft Law are to build a legal corridor to remove bottlenecks and free up resources for SOEs," Mr. Nguyen Ngoc Canh emphasized.

With specific information about the draft Law, Mr. Bui Tuan Minh, Director of the Department of Enterprise Finance, member of the Drafting Committee, Head of the Editorial Team, said that the Government has passed and reported to the National Assembly the scope of adjusting the Law: “This law regulates the management and investment of state capital at enterprises; Arrange and restructure state capital invested in enterprises; Inspect and supervise the management and investment of state capital at enterprises.

The above regulations aim to implement the principle that the State does not directly manage corporate legal entities, the State only manages investment capital flows in enterprises and enterprises operated by the provisions of enterprise law; State capital, after being invested in an enterprise, is determined to be the asset/capital of the enterprise's legal entity, etc. On that basis, the State clearly defines its authority and responsibility for the State's capital invested in the enterprise, the State is the owner of capital investments and does not interfere administratively in the production and business management activities of enterprises.

The Drafting Committee conference gave opinions on the draft Law on Management and Investment of State Capital at Enterprises.

Regarding the subjects of application, the draft Law identifies capital owner representative agencies, and capital owner representatives; Enterprises with state capital investment include enterprises with direct state capital investment and enterprises with other state capital investments; agencies, organizations, and individuals related to the scope of this Law.

In particular, through research and actual business activities, Mr. Bui Tuan Minh said that "enterprises with other state-invested capital" are enterprises with investment capital of enterprises with direct investment from the state to replace the regulation on "Enterprises with other state capital investment are enterprises with investment capital of more than 50% of charter capital of enterprises, with state capital directly investing 100% of charter capital" of the current Law.

Particularly for the rate of setting up Development Investment Funds at enterprises from after-tax profits, the Director of the Enterprise Finance Department said that the Ministry of Finance proposed 3 options: deducting a maximum of 50%, 80%, and 100% of profit after tax. The Ministry of Finance proposed to submit to the Government for consideration and decision to implement Option 2, which is to deduct a maximum of 80% of profit after tax.

"Reinforce" the quality of management

Contributing comments at the conference, representatives of several SOEs and agencies all highly appreciated the changes in the draft Law. Mr. Nguyen Van Mau, member of the Board of Members of Vietnam Oil and Gas Group, said that the draft Law has met the basic "revolutionary" principles to thoroughly implement the functions and tasks of SOEs and owners and representatives of state capital at enterprises. At the same time, the draft Law also expands a number of rights and increases autonomy for businesses such as capital contribution, salary principles, capital structure, etc.

However, Mr. Mau also pointed out some remaining concerns, such as the application subjects being enterprises with other state-invested capital, it is necessary to consider and evaluate the impact on the operating mechanism and the board of directors of the company in level 1 and level 2 enterprises.

Deputy General Director of Vietnam Electricity Group (EVN) Nguyen Xuan Nam expressed concern about the regulations on evaluating and classifying enterprises, because SOEs have a large workload and also follow the pace of the market, so it is necessary to have an overall assessment of business activities and corporate social responsibility.

Regarding the issue of the rate of setting up Development Investment Funds at enterprises, EVN representatives expressed that they should follow option 3, to help balance capital for increasing charter capital, fund deductions, dividend payments, etc.

Overall assessment, Mr. Dau Anh Tuan, Deputy Secretary General and Head of the Legal Department (Vietnam Confederation of Commerce and Industry - VCCI) said that the approach in the draft Law is clear and empowers SOEs, that is, management by planning and strategy. However, the performance of state-owned enterprises differs from that of private enterprises. SOEs not only ensure the efficiency of capital use but also ensure political, social, security, and defense goals, so the State's management goals may be broader, so things need to be "strengthened" in this draft Law is how to increase the quality of governance as applied to businesses listed on the stock market.