In a talk with Saigon Investment, Mr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, explained that in order to tackle these difficulties, we must simplify regulations within the Committee.
JOURNALIST: - Sir, how do you assess the functions separating state ownership from ministries by the Committee?
Mr. NGUYEN DINH CUNG: - Ownership and management functions must be separated because they are indispensable when reforming and transforming businesses. This also creates a more equal business environment across economic sectors. In the function of ownership, the first right must be the function of business investment and development. Business investment must lead and develop at the same time.
Appointing a representative for the capital in an enterprise is not to benefit but to let that person solve the business problems with a certain level of power. These are issues for development orientation, business, investment, development goals, as well as full supervision, appointment, evaluation and replacement of managers. The ownership function is not a state management function. Besides, the functions of the owner must be separated from those of business investors.
For example, the decision of an investment project is the business right of the enterprise, especially enterprises that still exercise the rights of both owners and business investors at the same time. Business right calls for right of business autonomy and not imposed administration. If the owner appraises the project to see its competency, it is to decide thousands of subordinate projects. That is the job of the CEO.
- Sir, returning to the Committee, the operations of General Corporations and Groups have encountered difficulties due to mechanism problems. Please can you comment on this.
- Projects and business plans of General Corporations and Groups must be submitted to the Committee for approval, but the Committee also seems to consult with state management ministries. Separate the ministries and branches so that the Committee can decide at its full discretion. While state management is environmental management and concerns with food safety and hygiene, it cannot make decisions or comment on an investment project.
As owner representative it is necessary to understand the Committee in the direction that they are equity owners. The power of the Committee only comes through shares, while assets like factories A and B are owned by the company. Why do we keep assimilating the possession of the State?
It is wrong in such basic concepts. Because it is indistinguishable, it is considered as State property, but it is not. It is legally owned by the company, and is the property of the company and of the owners. For example, if ACV invests in Tan Son Nhat airport, they own this airport. If the airport expansion does not need to bid because it is their asset why go for bidding? This is extremely dangerous because it seems to be public investment but actually it is not.
- As one of the members of the drafting committee of the project under Decree 131, how do you see the Committee operating, as well as resolving problems?
- This is a business investment organization, even though it is mandatory to be established in the form of a state agency. From the beginning, when preparing the Committee proposal, we referred to the models of Singapore, China, Malaysia, and Sweden and came to the conclusion that Vietnam was different.
For SOEs, the core issue is business autonomy, the very right to decide investment projects, how much and how to invest in the business. The owner only monitors the target and results. For example, in any area of business, the owner just needs to have a company, a competitive factory, and products to export.
The second step requires a separate financial mechanism for the Committee which operates as an agency, not a state management agency. The recruiting staff is not a civil servant, but is recruited full-time and is a professional with knowledge equivalent to that of a CEO of a big corporation. There is no shortage of people who can work in Vietnam, just a lack of mechanisms and institutions to utilize and to use.
- Sir, can you please share your concerns about the current divestment?
- The first thing to think about from an investment perspective is what do we divest for? I think that we only divest when doing something better than we have. Currently, we are lacking a mindset on what do we divest for? I strongly disagree with the divestment and supplement to the budget revenue and integrate into budget spending management. The capital should only be divested when money is needed to concentrate investment in important infrastructures and core projects of the economy.
Equitization and divestment should be considered as a change in investment structure, to have better asset structure and more quality. The Committee must have orientation towards development, and an orientation for SOEs. It has a factory, sells products or its shares decrease, it changes the ownership of shares into cash ownership that still belongs to the enterprise or the investor, not the budget. Putting into the budget means it takes, reduces assets on the side of the enterprise, affects the rights of third parties, creditors and affects the development capacity of enterprises.
