State-owned economic groups need stricter management

There are eight operational economic groups in Vietnam. Moreover, there are several other corporations which are not called ‘economic groups’ but have been operating under the mode of economic groups.

Most state-owned economic groups were established by administrative decisions and set up by restructuring general corporations. Meanwhile, no economic group has taken shape through the process of developing and agglomerating capital, or the process of merger and acquisition, or cooperation to develop into bigger groups.

Dr Tran Xuan Lich, Deputy Head of the Central Institute of Economic Management (CIEM), said that the economic groups have been controlling the markets of electricity, coal and minerals, oil and gas, telecommunications and rubber, while state management over the groups has been insufficient. Lich said that there are latent risks of competition limitation and monopoly.

Economists have also pointed out the low efficiency of investments in the economic groups.

Economic groups and state-owned general corporations have been found as using their huge sums of capital to make investments in many risky channels, including real estate, the stock market and banking sectors, while they have not focused o­n their principle business fields.

Figures released by the Ministry of Finance at the workshop about the operation and development of economic groups o­n May 25 showed that 28 out of 70 groups and general corporations have made capital contributions to securities companies, commercial banks, fund management companies, insurance companies and real estate projects, totalling 23,344 billion dong, or 8.7 percent of stockholder equity.

The Vietnam Shipbuilding Industry Group (Vinashin) has invested 110% of its stockholder equity in risky business fields. The figures are 15.1 percent for the Vietnam Tobacco Corporation and 50.2 percent for the Southern Waterway Corporation.