Climax of Specially Rated Businesses

 

On October 7, 2015, Deputy Prime Minister Vu Van Ninh agreed to apply special ratings to some SOEs. Specially rated companies included PetroVietnam Exploration Production Corporation (PVEP) and PetroVietnam Power Corporation (PV Power), both affiliated to the Vietnam Oil and Gas Group (PetroVietnam); EVN Power Generation Corporation 1 (EVNGENCO1), EVN Power Generation Corporation 2 (EVNGENCO2) and EVN Power Generation Corporation 3 (EVNGENCO3), affiliated to the Electricity of Vietnam Group (EVN); and Vietnam Helicopter Corporation (VNH). In July 2015, the Prime Minister agreed to give special ratings to six EVN-affiliated corporations.

 

The guidance on SOE special ratings were proposed for a long time, specified in the Joint Circular 15/1996 on June 25, 1996 by the Ministry of Labour, Invalids and Social Affairs and the Ministry of Finance. Qualified SOEs must satisfy one of the three following conditions: (1), established according to the Prime Minister’s Decision 91/TTg dated March 7, 1994 on pilot establishment of business groups; (2), established according to the Prime Minister’s Decision 90/TTg dated March 7, 1994 on continued restructuring of SOEs and have authorised capital of VND500 billion upwards; and (3) independent SOEs must meet three conditions: Play a key role in the national economy, have an authorised capital of VND500 billion or more, and have CEOs appointed by the Prime Minister.

 

Thus, a lot of SOEs have satisfied these qualifying conditions for long. The public wondered why special ratings applied to SOEs revitalised after a long time slipping into oblivion. Capital and CEO appointment conditions are obvious for major SOEs. The qualitative criterion “Play a significant role in the national economy” is the highest barrier to jump over.

 

In addition, rated SOEs will be provided a broader mechanism concerning organisation, restructuring and particularly payroll. Mobifone used to beg the Prime Minister for having a special mechanism like its rival Viettel. With payroll autonomy, SOEs will have a better condition to treat their employees to inspire their engagement, devotion and responsibility. However, payrolls must be transparent enough as many poor-performing SOEs used to give their executives very high pay.

 

It is wondering why SOEs rush to obtain such ratings before the deadline of equitisation. Do they need to go public when they are rated special? Or, is it meaningful to be rated special after being public companies?