Public service delivery units have nearly VND 1 million billion of State capital and assets

Public finance reform: Improving the quality of public service delivery units

Mr. Dang Quyet Tien gave a statement on December 11, 2019.

Still many problems

At the seminar, Dang Quyet Tien, Director of the Department of Corporate Finance under the Ministry of Finance, said by the end of 2018, there were more than 50,000 public service delivery units and had State capital and assets of nearly VND 1 million billion and created more than 2.5 million jobs.

The public service delivery system has been established in most areas, remote areas, networks of educational, medical, cultural and sports establishments.

Public service delivery units play a key role in providing public services and implementing social welfare policies. However, the organisation and operation of these units still face problems.

For example, “organisational structure of units is still still cumbersome, the internal government is still weak and the service quality and efficiency are still low. State budget spending for public service delivery units is too great. The implementation of the financial autonomy mechanism has not been yet effective and the socialisation is still slow.”

Facing this situation, the 6th conference of the Central Executive Committee XII issued Resolution 19-NQ/TW on continuing to reform the organisational structure and management to improve the efficiency of public service delivery units.

To concretise this policy, the Ministry of Finance has drafted a decree to transform public service delivery units into joint-stock companies in line with current law and their characteristics.

Also Tien said to develop the draft decree, the Ministry of Finance has worked with the Government Office to survey localities, ministries and sectors. The draft decree has been completed and sent for public comment.

Supplement flexible policies

The Ministry of Finance plans that public service delivery units eligible for transformation into joint-stock companies must ensure recurrent spending and investment spending or ensure recurrent spending in the latest year with the transformation period; for State capital of public service delivery units, after financial issues have been solved, the value of public service delivery units has been re-determined and these public service delivery units must be in the list of industries and fields subject to transformation approved by the Prime Minister for each period.

For units not on the list of transformed fields but meet financial conditions and socialization capacity, the minister, the head of a ministerial-level agency, Government’s agency, and chairmen of the Provincial People's Committee shall have to report to the Prime Minister for a decision on the transformation into joint stock companies.

The transformation of these units in the past time has seen a problem that State units do not need to own capital after being transformed into joint-stock companies but there is no legal framework for the implementation.

To create a legal basis for the equitisation of public delivery service units in which the State does not own capital after transformation, the Ministry of Finance proposes supplementing the form of “selling all the current State capital in public delivery service units or selling all State capital in combination with issuing shares to increase charter capital’’ besides the current form of “Maintaining the current State capital in public delivery service units, issuing shares to increase charter capital” and “partially selling current State capital in public delivery service units or partially selling State capital in combination with issuing shares to increase charter capital”.

Objects and conditions for buying shares are also expanded, especially criteria for selecting strategic investors for eligible units. Based on the size of its charter capital, operational fields and development expansion requirements, the agency that approves the plan for transformation of public delivery service units shall decide on criteria for selecting strategic investors and percentage of shares sold to strategic investors.

Strategic investors must meet the following conditions: legal status as prescribed by law; financial capacity and profitable performance results in the last two years from registering to buy shares, without accumulated losses; business lines in public service provision of transformed public delivery service units.

In addition, strategic investors must have a written commitment by a competent person when registering to become a strategic investor of a transformed public delivery service unit on the maintenance of its main business line and trademark at least three years after becoming a strategic investor, and have not transferred the purchased shares in this period.