SOEs: Stepping up Reshuffle

At a conference on financial and insurance group restructuring held by Bao Viet Holdings on February 14, 2012, Finance Minister Vuong Dinh Hue said that several State-owned enterprises (SOEs) had submitted their corporate restructuring plans.

 

Prior to this conference, Bao Viet Holdings, the country’s largest insurer, registered with the Ministry of Finance to boost the economy and reduce business costs. Minister Hue appreciated Bao Viet Holdings for its effort to cut costs at least 5 percent while ensuring business operations and targeting profit of VND145 billion in 2012.

 

However, Minister Hue reiterated that reducing costs by 5 percent was no longer an encouragement, but an order of the Government.

 

Following Bao Viet Holdings, Vietnam National Textile and Garment Group (Vinatex) will also announce its cost-cutting and restructuring plan on February 16.

 

“Next week, Electricity of Vietnam (EVN) will submit its plan, followed by Vietnam National Shipping Lines (Vinalines) and Vietnam National Petroleum Corporation (Petrolimex). From now through the first quarter of 2012, all State-owned enterprises will have to announce restructuring plans,” said Hue.

 

He said that while inflation growth has been checked, it remained quite high and lending rates have not been brought down, so strengthening financial administration and cost reductions is vital for enterprises. This is not a short-term solution but a fundamental basis for SOEs.

 

The top competitive edge of all companies is to boost corporate financial administration and cost reduction. Last year, ministries, branches and localities cut 10 percent of budgeted wage hikes and reduced administrative costs by 10 percent to increase expenditure for social welfare. Hence, Minister Vuong Dinh Hue noted that this was the time that SOEs need to exercise their responsibility to themselves and society, sharing with the State and the people.

 

Minister Hue said the Ministry of Industry and Trade has completed the “SOE restructuring scheme” and the Government has approved and reported it to the Politburo. Once ratified, the ministry will work out issues in detail and assign SOEs to implement it.

 

One of most central and fundamental issues of the SOE restructuring scheme is to enhance capacity, governance and especially financial administration. “This move of SOEs is necessary for companies of all economic sectors to take practical action concerning restructuring. While interest rates remain high, the best and most realistic way for them is to rescue themselves first,” said Mr Hue.

 

He noted that restructuring schemes for credit institutions, securities companies and insurance companies have also been completed and will be deployed synchronously.

 

TN