New things in the "super committee" model

Vietnam Oil and Gas Group (a State-owned enterprise) is on the list of 20 SOEs transferred to the State Capital Management Committee.

These changes are expected to help the “super committee” achieve the goal of overcoming limitations and inadequacies of the current owner representative model, improving the efficiency of using State capital at the enterprises.

Manage 20 large enterprises, instead of 21

According to the latest draft (4th draft) Decree on the functions, tasks, powers and organizational structure of the State Capital Management Committee at enterprises, the list of large companies that will be transferred to the “super committee” has some changes. Accordingly, 20 large state-owned enterprises including SCIC and parent companies of 19 corporations, groups which are under the management of the specialized ministries, will be managed by the Commission, instead of 21 enterprises as proposed in the first draft. “Super committee” will be the State representative at 20 State-owned corporations with a total state capital of over 821 trillion VND, total value of assets at over 1,500 quadrillion VND (equivalent to 50% of the value of the state capital and the total value of assets of enterprises with 100% of charter capital of the State). Cuu Long Transport Infrastructure Management Investment and Development Corp. Ltd., is the only one removed from the list.

Regarding the organizational structure, the first draft Decree stipulates that the “super committee” has 11 subordinate units. However, after receiving comment for a streamlined, effective and efficient apparatus, the latest Decree has reduced the number of subordinate units of the “super committee” to 9 units, including: Department of Agriculture; Department of Industry; Department of Energy; Department of Technology and Infrastructure; the Department of General Affairs, Department of Legislation and Internal Control; Department of Staff Organization; Administration Office; and Information Centre.

In addition to the new points above, the 4th draft decree on “super committee” also completely abolished the regulations on monitoring and evaluation mechanism of the agency. The reason for this decision is that there is a system for regulating the monitoring and evaluation of Government agencies such as the State Capital Committee. Thus, it is unnecessary to redefine.

Regarding the deadline for the transfer of SOEs to the "Super Committee", the draft decree specifies the deadline for the transfer of enterprises from ministries to this agency within 90 days from the effective date of this decree. Related ministries and the State Capital Management Committee at these enterprises complete the signing of the minutes of transferring the right of representatives of state capital owners at enterprises.

For the transfer process to take place smoothly, Mr. Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management (CIEM), Ministry of Planning and Investment said that it was necessary to specify clearly responsibilities and powers of the committee as well as specialized ministries. Accordingly, in order to avoid the fact that an enterprise is subject to be under the supervision of the committee and the management of ministries and branches, the draft decree regulates that the contents of management under the “owner function” are implemented by the representative agency of the owner, the management of enterprises under the function of "state management" is the management of the sector. Ministries and sectors continue to assume the tasks of state management of enterprises according to their assigned sector and field.

Financial mechanism tied with effective requirements

According to Mr. Phan Duc Hieu, it is clear that the management function of this committee and the ministries and branches will help to clearly separate the contents of ownership functions that are carried out by the real owner's representative office, the state management functions that are implemented by the ministries which manage the sector, avoiding the overlapping, multi-layer management that affect the effectiveness of business investment.

About the relationship between the committee and the relevant state agencies, the draft decree on "super committees" stipulates that this committee is responsible for directing the enterprises that the committee acts as the owner’s representative to formulate and fully implement the development strategies and plans in line with socio-economic development plans, sectoral development strategies or plans.

In addition, the committee will take the lead in coordinating with concerned agencies in implementing the tasks and powers of SOEs and state capital portions at the enterprises that it acts as the owners' representatives in charge of management, using state capital invested in production and business in enterprises. At the same time, it will assume in coordinating with the concerned agencies in organizing the arrangement, renewal, reorganization and ownership transformation, restructure of the state capital in enterprises according to the available schemes and plans which is already approved before the transfer of the enterprise to the Committee.

One issue of major concern is how SOE losers’ responsibility is after transferring to the "super committee". Mr. Phan Duc Hieu said that the responsibility causing losses for businesses cannot be ended. "The committee is only responsible for handing over this loss and after that, as a representative of the owner, there will be solutions to help businesses escape the difficult situation, gradually recover. The responsibility for causing the previous loss belongs to any agency, it will still be responsible.

About the tasks and powers of financial management and how the first draft regulates the specific mechanism for managing finance, assets, salaries and incomes. Accordingly, the committee will be provided with special funding from the state budget and additional income associated with the business efficiency of enterprises administered by the committee. However, according to the Ministry of Planning and Investment, during the discussions and appraisals, many opinions disagreed with the above-mentioned mechanism. Thus, the latest draft stipulates that the Committee shall prepare annual budget estimates, financial plans and budgets of the Committee within three years to submit to the competent authority. At the same time, coordinate with the concerned agencies in elaborating financial mechanisms, regimes and criteria for the committee’s spending norms in the assigned fields in association with the performance requirements.

About the concerns over regulations on the state budget spending mechanism of "associating with the effectiveness of the work of the Committee", the representative of the drafting agency said that this provision is not contrary to current regulations. Moreover, the Committee is a state agency but mainly responsible for managing state capital investment in enterprises. Thus, along with the compliance with current regulations on financial management of a state agency, the economic efficiency in general and efficiency of state capital management committee in particular is an important factor in the review and development of institution for the operation of the "super committee".