State Capital Investment Corporation: An end to scattered investment

State Capital Investment Corporation: An end to scattered investment

A project concerning the establishment of a state capital investment corporation has been submitted to the Prime Minister for approval. VIB Forum reporter interviewed Mr. Pham Thanh Quang, the deputy head of the State Corporate Finance Department.

The State has invested nearly VND200,000 billion in 6,000 enterprises of different sectors. Which of the enterprises are under the management of the Corporation?

According to the Enterprise Law, the target groups are joint stock companies transformed from State owned enterprises (SOEs) or newly established ones by ministries, agencies and localities, and limited liability companies with one or more members under the management of ministries, agencies and localities. Presently, 743 joint stocks and one-member limited liability companies with a total State capital of VND3,936 billion will be under the management of the corporation. The Prime Minister has approved the reform of over 3,000 SOEs by 2005 using VND54,000 billion in State capital. After the transformation the State capital in those enterprises will be reduced to 45-50 per cent (VND25,000-27,000 billion) and will be managed by the corporation. Therefore, by the end of 2005, the corporation will manage VND30,000 billion in capital spread between 2,200 enterprises. In the future, the government may assign more capital from other types of enterprises to the corporation.

How can the corporation efficiently manage such a huge amount of capital?

The establishment of the corporation aims to put an end to the present scattered investment. The corporation will restructure the capital in enterprises, sell unnecessary shares, encourage the participation of other economic sectors and focus on important sectors. In the future, State invested enterprises will be reduced in number, increased in size in order to dispel scattered investment. The corporation will be the biggest investor, performing the role of State investment in enterprises, especially in important sectors that the State needs to control.

How will the corporation be organised for effective operation?

The corporation will be small in size, focusing on financial management as an investor. As shares of small businesses in the trade and service sector will be sold, the corporation can concentrate on major and important tasks with a minimal staff. The corporation will operate in specialised units, with each one focusing on a particular sector and may hire consultants if necessary. The goal is to concentrate on major projects beyond the capacity of other economic sectors with a small but efficient workforce.

How will the State control the corporation?

The Prime Minister’s decision to establish the corporation stipulates that the Prime Minister or the Finance Minister (assigned by the Prime Minister) has the power to appoint and dismiss the management board and the director general of the corporation. On behalf of the Prime Minister, the Finance Minister will control State capital under the management of the corporation, retain ownership, decide on financial regulations, determine the establishment or dissolution of member companies recommended by the management board, and supervise and inspect the operations of the corporation.

When will the corporation be operational?

We are trying to get the corporation established by early 2005. However the completion of legal documents and regulations and the transfer of capital in the enterprises could take up to a year.

• Reported by T.A