Strengthen decentralization to facilitate enterprises

Workshop to collect opinions on the draft Law on Management and Investment of State Capital in Enterprises held on August 5, 2024 in Ho Chi Minh City Photo:T.D

Mr. Bui Tuan Minh, Director of the Corporate Finance Department (Ministry of Finance), has revealed that the draft law on management and investment of state capital in enterprises (hereinafter referred to as the Draft Law) introduces several new provisions compared to Law 69/2014/QH13 to better suit practical demands.

Notably, the Draft Law clearly stipulates the procedures, responsibilities of agencies, required documents, and content for the scrutiny of reports seeking National Assembly approval for investment in enterprises. Additionally, the draft updates the list of sectors where the state needs to invest capital in enterprises; it also codifies provisions on the accountability of the owner's representative agencies, state-owned enterprises, and representatives of the owner regarding state management of enterprises and related issues before the National Assembly, Government, and relevant agencies.

The management of state capital invested in enterprises aims to separate and clearly define the functions of the capital owner and state management, to clearly delineate and strongly decentralize management, inspection, supervision, reporting, and explanation of state capital investment in the direction of: the state and government managing the owner's representative agency, the owner's representative agency managing the capital share in directly state-owned enterprises, and directly state-owned enterprises being responsible for managing the capital share in other state-owned enterprises, Mr. Bui Tuan Minh emphasized.

Contributing his opinions at the workshop, Mr. Vo Huu Hanh, Manager of the Ho Chi Minh City Corporate Finance Sub-department, assessed that this draft law represents a fundamental and comprehensive renovation compared to the previous one. This time, elements such as management of debts, capital mobilization, and fixed asset procurement are absent, indicating the drafting committee's intention to decentralize more authority to enterprises in capital management and utilization.

Regarding the rights of the owner's representative agency, Mr. Hanh stated that according to Clause 8, Article 21 of the Law on Organization of Local Government 2015, provincial People's Committees have the right to decentralize and authorize lower-level People's Committees, agencies, and other organizations to perform the tasks and powers of the provincial People's Committees.

Colonel Nguyen Nang Toan, Deputy General Director of Tan Cang Sai Gon Corporation

Therefore, to contribute to enhancing proactivity, timeliness, and effectiveness in performing the function of representing the owner of 100%-state-owned enterprises, Mr. Hanh suggested studying and supplementing the provision on "decentralization" for certain tasks within the competence of the "owner's representative agency, which is the provincial People's Committee" to specialized agencies and directly subordinate People's Committees (based on regulations on the organization of local government).

To ensure the goals and requirements of clear delineation and strong decentralization in the Draft Law, many opinions at the workshop also suggested that regulations should be oriented towards the state managing investment capital through the owner's representative agency (not directly managing enterprises with state capital), the owner's representative agency being responsible for managing capital in directly state-owned enterprises (not directly managing enterprises with other state capital), and directly state-owned enterprises being responsible for managing capital in other state-owned enterprises.

Regarding the issue of salaries, the draft stipulates that the salaries and bonuses of the Chairman and members of the Board of Members are derived from after-tax profits. Some opinions suggest that this should be reviewed to align with the provisions of the Law on Accounting Law and Law on Enterprises.

Colonel Nguyen Nang Toan, Deputy General Director of Tan Cang Sai Gon Corporation, cited that according to the Law on Tax and the Law on Enterprises, this is an expense of the enterprise. For state-owned enterprises that operate at a loss and are inefficient, there will be no source to pay salaries to managers. Currently, in state-owned enterprises, it is not only the capital representative or the chairman who represents the owner but even executives such as the general director are also appointed by the owner.

If separated in such a way, with the same position appointed by the owner but one person's salary is derived from costs while another's is from profits, and if the enterprise has no profits, then the person receiving a portion of the profits will face difficulties and conflicts may arise in enterprise management.