New effort urged to restructure Vietnamese firms

Dr. Nguyen Dinh Cung, deputy director of the Central Research Institute for Economic Management said that although some industries had been dominated by SoEs, including telecommunications and air transport, the State sector failed to play its major role as expected.

"Its contribution to national reconstruction and development has not matched its position and resources with which it was entrusted."

The State sector enjoys one-third of total social investment, and almost all of the national resources and minerals, but its contribution to the country accounts for between 25 and 27 percent of the Gross Domestic Product, according to the economist.

Although the number of SoEs has been cut to 1,500 from 12,000 over the past 20 years, efficiency is questionable.

"The growth rate of the state sector, in general, and SoEs' in particular, is always lower than other economic sectors, and even lower than the national average," said Cung.

Firstly, Cung said, the sector's failure was not because of its own form of state ownership, but because of "unsuitable" institutions, tools and ways to practise the rights to ownership.

Secondly, although the country has switched to a market economy, many State enterprises have not operated accordingly, with unaccountability being a major problem.

Lastly, Cung said, a the majority of SoEs have not actually integrated into the world economy, lacking a global business vision and mindset.

To solve the problem, Cung said, all principles and mechanisms of the market economy must be fully applied to State-owned enterprises, while a framework for corporate governance must be accomplished according to international standards and norms.

"We have to do away with any style of loan and credit appointed and ordered by the State," he said.