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 One
of the ways to help reform state enterprises is to let the
government and related social organizations focus on the
financial performance. Financial performance will then involve
technology upgrades, market or training practices, and so on. If
the SCIC decides to look at the financial and management factors
of those SOEs in their portfolio, it will be a good move in the
right direction. Over the past five years, state capital has not
been managed in the most efficient way, as it was needed for
pursuing too many priorities, too many objectives. The
establishment of the SCIC, with the mission of maximizing the
value of state capital, can be considered a good signal that the
public sector has decided to manage its capital in a uniform and
objective manner.
Mr. Dominic Scriven, Director
Dragon Capital Investment Fund
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It is planned that the SCIC will take over more than 1,000 SOEs
over the next five years. Eventually, however, we will try to
narrow our portfolio to 100-200 firms involved in key industries
of the economy. The rest will be sold off to the public.
According to the Government Decision5, the SCIC is responsible
for managing state capital at SOEs that have completed their
equitization process, which means that in principle, once
equitized, all SOEs will be transferred to the SCIC despite the
previous corporate types.
In order to effectively exercise the state shareholder rights in
these diversified investment portfolios (in terms of scales and
industries), the SCIC needs to have a reformed method of
portfolio management. The SCIC will exercise shareholder rights
through its representative at the invested companies, and follow
the corporate governance principles provided by the Enterprise
Law and the company charters. It is worth emphasizing that the
SCIC will not infringe on the day-to-day operations of its
managed SOEs, but focus on improving their corporate governance
and structures. Guidance on the State Representative at
state-owned enterprises will be developed soon. The SCIC has
been partnering up with a number of leading financial consulting
groups to develop internationally accepted corporate governance
codes to be applied to all SCIC-managed firms. We plan to
organize a number of training courses, seminars and other
learning activities to build capacities for our representatives
at SOEs. We believe that the SCIC, through this process, will
actively promote the application of best practices in corporate
governance in both SCIC-managed firms and all other firms.
Mr Le Song Lai, Deputy Director
State Capital Investment Corporation (SCIC)
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The SCIC should have clear targets of how much of state capital
and how many SOEs to represent. The 100 or 200 firms, as
indicated by the SCIC's management, in my opinion are too many.
Many of the enterprises in their portfolios might be in consumer
goods producing, tourism, or trading - they don't need state
dominance or control. So what is the purpose for the SCIC in
keeping them? It could be better for the SCIC to plan to further
divest state capital in firms in such non-strategic sectors.
Before selling off those firms, it would be great if the SCIC
would help restructure the poor performers - for example,
through the acquisition and merging process.
On the other hand, as a controlling shareholder, the SCIC can
ensure that the other shareholders in those firms would be able
to enjoy all their legal rights, such as participating and
voting in shareholder meetings; obtaining relevant and
sufficient information on the corporation in a timely and
regular basis; transferring shares in a convenient way; and
forcing the invested companies to comply with the local business
laws. The state shareholder (through the SCIC) can request the
invested companies to amend their charters. The SCIC can also
take the lead in the development of a standard corporate charter
(with particular regard for the organizing of the general
shareholder meeting) and ask all of their managed companies to
apply. It has been observed that charters and shareholder
meetings in many joint-stock companies do not comply with local
corporate governance regulations.
Mr. Nguyen Hoang Hai, General Secretary
Vietnam Financial Investors Associations (VAFI)
-
 A
distinction needs to be made between the different types of
general corporations. All GCs are being transformed, either into
parent-subsidiary model companies or economic groups. For parent
subsidiary model corporations, it is unclear how state capital
will be managed. The SCIC charter indicates that it takes over
the management of state capital once the parent company itself
is equitized. But this remains to be seen. For economic groups,
it is unlikely that the SCIC will take over management of state
capital since they report directly to the Prime Minister.
However, the management boards of these economic groups now
frequently include a Ministry of Finance official, and it is
possible the Prime Minister will appoint someone from the SCIC
to these positions.
Mr Scott Cheshier, Specialist in Economics
UNDP Vietnam
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According to the General Statistics Office, by the end of 2004,
the total capital amount of 100% state-owned enterprises was up
to 278 trillion VND, and the amount of state capital in
equitized enterprises was 27 trillion VND. It is estimated that
by the end of 2006, this total figure will be 350 trillion VND
(22 billion USD), accounting for about 35% GDP. By 2010, when
the equitization plan is completed, even if only one-third of
the state capital (not including economic groups) would be
transferred to SCIC, the value of these state assets would rise
up to 10 billion USD (equivalent to 12.5% of Temasek's
portfolio). This is a huge amount of money to be injected into
the economy through the diversified portfolio of investment that
SCIC will be managing. Therefore, the SCIC will also play an
important role in developing and stabilizing our capital market.
However it should be clear that the top priority of the SCIC's
operation is to maximize shareholder value, rather than to
balance the capital market.
Mr. Huynh The Du, Researcher
Fulbright Economic Teaching Program
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