Reviewing policies when state-owned enterprises are not profitable

	No direct intervention in salary and bonus policies of state-owned enterprises
	Strengthen decentralization to facilitate enterprises
	Fast and effective in restructuring state-owned enterprises

A discussion on the draft Law on State Capital Management and Investment in Enterprises. Photo: H.Diu

Continuing discussions with state-owned enterprises on the draft Law on State Capital Management and Investment in Enterprises, under the program dated August 19, 2024, the Ministry of Finance has coordinated with the Commission for the Management of State Capital at Enterprises organized a discussion to gather opinions from electricity enterprises managed by the EVN.

At the discussion, all agreed with the amendment of Law No. 69/2014/QH13 on the management and use of state capital invested in production and business at enterprises, thereby helping State-owned enterprises have mechanisms to operate more conveniently, enhance decentralization, and increase the autonomy and self-responsibility of units representing state capital ownership.

However, there are still many concerns for businesses, especially when the electricity sector has many specific characteristics. Ms. Do Thi Loat, Head of EVN's Supervisory Board, said that the current average electricity selling price mechanism that EVN is implementing is not keep up with production costs due to the need to ensure the goal of macroeconomic stability, ensuring electricity supply from the State's perspective. Therefore, in 2022 and 2023, even though electricity prices were adjusted, EVN's financial statements still record losses, and the recently released financial statements for the first six months of 2024 also reported losses.

Therefore, according to Ms. Do Thi Loat, policy mechanisms related to setting up Development Investment Funds for enterprises from after-tax profits or paying salaries and bonuses as well as evaluating and classifying enterprises according to the provisions of the draft Law may bring disadvantages to EVN.

For example, regarding the salary mechanism, the draft Law determines that salaries and bonuses are linked to tasks, production and business conditions, industries, nature of operations, labor productivity and production and enterprise's performance. Thus, it will be difficult to meet the criteria on profit and productivity at EVN, so Ms. Do Thi Loat proposed that the competent authority give EVN a specialized salary policy like the policy is currently applied at VNPT, Vietnam Airlines...

But on this issue, the representative of the Ministry of Finance said that according to the provisions of the draft Law, salaries and bonuses of people appointed, introduced, and hired by the capital owner representative agency to work directly at enterprises are paid from the after-tax profit source. In case the after-tax profit revenue is not enough, the Investment and Development Fund at the enterprise corresponding to the state capital invested in the enterprise will cover. If there is a shortage, the state budget expenditure estimates of the capital owner representative agency will pay.

Regarding the rating of businesses, according to the Head of EVN's Supervisory Board, there are currently no detailed criteria, so the classification of businesses is based on four financial criteria such as revenue, payment coefficient, profit margin... But for specialized manufacturing enterprises such as EVN, Oil and Gas Group, they must both ensure business and meet economic tasks from management agencies, a clear set of criteria is needed. Because even a small error can affect the business's rating.

In addition, regarding the issue of investment project approval, a representative of EVN Hanoi said that the draft Law does not clearly state the nature of the project group, but only stipulates classification according to project value to submit to the competent authorities for approval, so if it is an urgent project, approval will be very slow.

Sharing the same opinion, a representative of Electricity Generation Corporation 2 (EVN GENCO 2) also said that investment in projects is governed by the Investment Law and Construction Law. EVN delegates to representatives to approve projects up to VND1,500 billion, but according to the draft Law, projects worth up to VND1,000 billion must be approved by the competent authorities.

The representative of the Ministry of Finance and the Commission for the Management of State Capital at Enterprises said they understand the opinions from businesses, because these are important grounds for agencies to perfect the draft Law, ensuring the goals, quality and progress to submit it to the National Assembly at the next session.