How is the "super committee" operated?
Vietnam Oil and Gas Group is one of 21 big corporations to be transferred to the "super committee". Source: Internet. |
The first outlines of scale, mechanism of operation, super-committee oversight have shown the stature of an "overarching institution", where sentiment is expected to change the face of the SOEs.
"Super Commissions" holds 21 large SOEs
According to the draft decree, the "super committee" is a governmental agency, acting as the representative of state capital owners at enterprises with state capital as assigned by the Government and in accordance with the Law on Governance using state capital to invest in production and business in enterprises. Regarding the management of state capital invested in production and business in enterprises, beside the organization of exercising the powers and responsibilities of the owner's representative office; it has the power to petition the Government, the Prime Minister shall consider and decide matters falling under the competence of the Government or the Prime Minister, on the restructuring of state capital at enterprises, the mechanism of operation of State enterprises, management and use of state capital to invest in business production. On strategies, the "super committees" shall formulate and submit to the Prime Minister for approval the strategy, planning, programs, long-term, five-year and annual plans of the Commission and organize the implementation of strategies, programs and plans after they are approved. At the same time, investment projects under its authority shall be decided in accordance with the provisions of law.
In terms of scale, the "super committee" will hold 21 big corporations, including the State Capital Investment Corporation (SCIC) and the 20 parent companies of corporations that are State owned with 100% charter capital or long-term controlling shares. The estimated value of state ownership in these 21 corporations equals 50% of the total value of state owned capital in SOEs, about 5 trillion VND.
According to Ministry of Planning and Investment (MPI), the establishment of this committee is necessary and effective, and meets the requirements of the renewal practice in order to overcome the shortcomings and limitations of the current owner representation model. Of which, the distribution of dispersed owner functions to many agencies results in unclear accountability and it is difficult to determine which organizations or individuals are responsible for the cases of misconduct and loss of state capital as has happened in the past. "The establishment of the State Capital Management Committee at the enterprise is to create an equal business environment for enterprises, and at the same time, to create conditions for state agencies to concentrate their capacity on the state management is increasingly complex and heavy in the process of socio-economic development", MPI emphasized.
In financial terms and assets management of the company, according to the drafting committee, because the Commission is a special Government organization. Both government agencies and a representative agency of owners have the duties of management, investment and trading of state capital, therefore, the Drafting Committee recommends the Ministry of Finance to issue guidelines on financial activities of the Committee in three principles: Functions and tasks of the Committee, including development investment and recurrent expenditures; State budget expenditures shall be balanced in state budget revenues from equitization, reorganization, divestment, dividends and after-tax profits of enterprises under the ownership of the Committee; Apart from the prescribed salary regime, the specialized agency has an additional income associated with the efficiency of state capital management and labor productivity of the enterprises as the owner's representative.
Management 5 million billion VND - not too big challenge
The model of state capital management is not new in the world, but in Vietnam this is the first time a large state-owned capital management committee has been established. Therefore, although it is hoped that this committee will be established, it is not without fears that the focal point of the company as well as the amount of capital it administers is not small. Not to mention the agency must also lead to carry out development investment tasks on a large scale in strategic sectors, leading and spreading the economy with the aim of promoting effective business capital flows, thereby developing the socio-economic development.
Relating to this concern, it is known that according to the draft decree, the structure of the "super committee" will be composed of specialized management departments according to the main business lines of the enterprise (including the Department of Enterprise Fund Management Department of Capital Management in manufacturing enterprises, Department of Capital Management in Energy Enterprises, Department of Capital Management in Information Technology, Telecommunications and Communications Enterprises); floor and functional advisory departments (Department of Strategy and Development, Department of Financial and Risk Management, Department of Legislation, Internal Control, Department of Organization, Personnel and Training).
On the challenge of the committee to manage the capital of 21 large SOEs, according to Mr. Phan Duc Hieu, deputy director of the Central Institute for Economic Management, this is clearly a challenge if not done professionally, focus, and unify the rights of the owner. However, Mr. Phan Duc Hieu stressed that this is not a big challenge, considering the situation in Vietnam, the Committee is a government agency but it acts as an investor. Despite asset management of 5.4 trillion VND, compared with large corporations in Vietnam, or in the region, and in the world, the scale is not so great. In the face of challenges in capital, Mr. Phan Duc Hieu said that the Committee should have a broad and effective vision of the entire SOE sector in the medium and long term.
According to economist Luu Bich Ho, the biggest challenge for this committee is to overcome the shortcomings and limitations of SOE capital management and state capital investment. In the enterprise, it is not effective, wasting large amounts of capital, property losses, heavy corruption, etc. Now with the amount of capital and assets focused on the "super commission" management will be efficient, therefore, overcoming the situation that is the biggest requirement, also the biggest challenge.
"The Commission must take advantage of the unanimous consent of the ministries, which will have to transfer ownership of capital, and work well with large SOEs to do so. That will not be easy due to the possible entanglement in the implementation organization and the entanglement of rights ... The discussion process leading to the establishment of the commission has shown that", said expert Luu Bich Ho.
According to the expert, the capacity and qualities of the key leaders and staff of the commission must meet the requirements of the assignment. "Managing tight capital is difficult; business capital for effective use is even harder. This is a completely new organization in our country, with no practical experience, so need to just do and draw experience to be better. If you do not see progress after a while, you may have to adjust both the rules and the personnel of the committee", said expert Liu Bich Ho.
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