SOEs Embrace “5 Pioneers” Initiative to Become Economic Locomotives

10:02:16 AM | 6/24/2024

Recently, Prime Minister Pham Minh Chinh presided over a conference with State-Owned Enterprises (SOEs), highlighting their role in driving economic growth, maintaining macroeconomic stability, and safeguarding essential economic equilibrium.

Vietnam needs strong domestic enterprises capable of achieving global scale, competitiveness, and creating renowned brands to drive industrialization and modernization

Prime Minister Pham Minh Chinh underscored the commitment of the Party and the State to prioritize advancing the SOE sector. Recognizing its substantial contributions to socio-economic development, growth stimulation, macroeconomic stability, and the overall economic equilibrium, he emphasized the important role of SOEs in ensuring social security measures.

Against the backdrop of a complex global economic landscape and many challenges in the domestic economy, the pivotal role of (SOEs) has once again been underscored and enhanced. They remain an effective instrument for stabilizing the macroeconomy, guiding, regulating and propelling socio-economic development, effectively addressing market economy deficiencies.

Prime Minister Pham Minh Chinh emphasized that 2024 stands as a critical year for accelerating efforts to achieve the objectives set forth in the 13th National Party Congress. With limited time remaining, it is imperative to promote the successes attained over the past three years, surmounting limitations and external challenges.

Major economic drivers

Prime Minister Pham Minh Chinh outlined five important orientations. Firstly, SOEs are pivotal drivers of socio-economic development, growth, and macroeconomic stability.

We must instill and foster a spirit of self-reliance, accountability, creativity, patriotism and dedication among civil servants, public employees and workers to effectively fulfill this mission. Additionally, the focus should be placed on revitalizing traditional growth engines such as investment, exports, and consumption, while actively promoting new drivers namely digital transformation, green initiatives, circular economy practices, semiconductor chip production, hydrogen technology and advancements in artificial intelligence (AI).

Secondly, SOEs must review and effectively execute approved restructuring projects, annual and five-year development strategies, as well as business and investment plans. They should accelerate the resolution of longstanding issues, accelerate investment implementation, complete delayed projects and ensure timely project delivery as stipulated by regulations.

The path to success lies in foresight, enabling businesses to surmount challenges effectively. Therefore, it is imperative that enterprises proactively devise detailed, specific short-term, medium-term, and long-term roadmaps within their annual and five-year production, business and investment development plans. This proactive approach entails actively pursuing key objectives such as achieving revenue targets, profitability goals, state budget contributions and enhancing average worker income.

Thirdly, SOEs must prioritize enhancing operational efficiency and bolstering production and business activities in a fundamental, systematic, comprehensive and sustainable manner. This requires a commitment to innovation across production methods, technology adoption, administrative processes and personnel management. Emphasizing human resources as pivotal, SOEs should innovate recruitment practices, including piloting the appointment of non-party member foreign executives. Also, appropriate policies and mechanisms for remuneration and salary structures is essential.

Fourthly, SOEs must speed up project progress, elevate development project quality and efficiency, and leverage their advantages in resources, capital, assets, technology and high-caliber human resources.

"If SOEs do not assume the role of pillars, taking the lead and forging paths in development investments, generating momentum, and spearheading socio-economic progress, which other economic sector could possibly undertake such responsibilities?" queried Prime Minister Chinh.

Fifthly, the priority must lie in nurturing and advancing national and large-scale enterprises to assume pioneering roles in critical industries and fields possessing competitive advantages. These enterprises are crucial drivers in leading the nation's industrialization and modernization endeavors.

Delving deeper into this content, Prime Minister Chinh underscored that Resolution 29 of the Central Committee outlined the establishment and growth of robust economic conglomerates, state-owned enterprises, and domestically-owned private enterprises. These entities are projected to operate with high effectiveness, international competitiveness, and pivotal leadership roles within key sectors. Strengthening coordination mechanisms and delegating strategic tasks to these large-scale groups, state-owned enterprises, and capable private enterprises are integral components of this overarching strategy.

With the aspiration that “every sector has a Viettel, every province and city hosts a Becamex,” Prime Minister Chinh urged these existing successful models that prompt replication nationwide.

Resolution 41 of the Politburo further underscored the imperative to craft breakthrough policies aimed at nurturing and expanding national enterprises, large-scale corporations, and entities poised to lead pivotal industries and fields. These enterprises are expected to occupy crucial positions in the global supply and value chains.

"More than ever, Vietnam requires strong domestic enterprises capable of achieving substantial scale, competitiveness on the global stage, and renowned brands that spearhead the nation's industrialization and modernization," emphasized the Prime Minister.

The Prime Minister directed SOEs, particularly those of significant scale, to redouble their efforts, improve capital accumulation, and intensify investment initiatives. He called upon them to serve as major regional and global locomotives, striving to enhance the prestige and brand recognition of Vietnamese enterprises on the international stage.

SOEs play a role in driving economic growth, maintaining macroeconomic stability, and safeguarding essential economic equilibrium

5 pioneers of SOEs

The Prime Minister urged SOEs to lead in five key domains:

Pioneering in innovation and technology, adopting and mastering cutting-edge technologies, particularly amidst the 4th industrial revolution; Pioneering in international integration, effectively pursuing overseas investments; Pioneering in resource utilization and anti-corruption; Pioneering in policy development, undertaking research, proposing, and implementing innovative policies and mechanisms crucial for national and socio-economic advancement, alongside ensuring robust social security; Pioneering in human resource training and implementing intelligent governance practices.

For several specific tasks, the Prime Minister directed SOEs operating in the energy sector (electricity, petroleum, coal) to effectively support the nation's economic requirements, with a particular emphasis on ensuring uninterrupted electricity supply under all circumstances.

In the realm of food supply, SOEs in the agricultural sector are tasked to enhance production and commercial activities through the application of advanced science and technology, market acumen, and close coordination to execute the initiative aimed at cultivating 1 million hectares of high-quality, low-emission rice. The Prime Minister endorsed the convening of a trilateral conference involving the State, enterprises, and the public to advance this project.

SOEs providing public services are instructed by the Prime Minister to uphold social security standards, guarantee clean water provision, and prevent flooding. These entities are also mandated to continue researching solutions aimed at exempting or reducing fees and charges, thereby supporting citizens and businesses, particularly in areas such as water services, telecommunications, logistics, airport operations, and related fields.

In the fields of construction and urban infrastructure development, SOEs are directed to prioritize the construction of one million units of social housing, with a specific target to complete the development of 130,000 apartments this year.

State-owned commercial banks are at the forefront of efforts to reduce interest rates for individuals and businesses, while channeling credit toward both traditional and emerging growth sectors, thereby fostering regional economic integration and development.

All SOEs’ opinions carefully considered

For ministries, agencies and local authorities, the Prime Minister urged a practical approach of genuine commitment: "Think honestly, speak honestly, act honestly and deliver tangible outcomes," advocating a philosophy of "less talk, more action."

Ministry of Planning and Investment is tasked with intensifying efforts to stay abreast of international and regional dynamics, domestic business trends, and fostering innovation. It is charged with pioneering initiatives to alleviate obstacles, streamline administrative procedures, propose effective mechanisms and policies, and explore preferential measures to advance priority sectors. The Ministry is also mandated to conduct comprehensive reviews of legal frameworks and simplify administrative processes.

Ministry of Home Affairs, in collaboration with the Central Organizing Committee and the Party Committee of the Central Enterprises Bloc, is instructed to propose judicious personnel and organizational strategies tailored to SOEs. This directive aims to ensure alignment within the broader political framework under the leadership of the Party.

Ministry of Finance was directed to expedite the drafting of the Law on Management and Investment of State Capital in Enterprises in line with Resolution 68. This entails further decentralization to owner representative agencies, enhancing empowerment and resource allocation efficiency, bolstering implementation capacities at lower levels, and reinforcing oversight and supervision mechanisms.

The Commission for the Management of State Capital at Enterprises (CMSC) is steadfast in enhancing operational effectiveness in alignment with Government Resolution 68. Building upon Politburo conclusions, it refines operational models to elevate the management of capital and assets within enterprises. Emphasizing inspection and supervision, CMSC urges enterprises to rigorously execute strategies, production plans, and business initiatives.

Representative agencies of SOEs are directed to assertively fulfill their functions, tasks, powers, and responsibilities. They are mandated to promptly resolve issues within their jurisdiction, addressing longstanding challenges decisively. Leaders of corporations, general companies, and SOEs are expected to demonstrate boldness in thinking, action, and accountability, enhancing management capabilities and focusing resolutely on core business operations.

The Prime Minister reaffirmed the Government's openness and responsiveness to all enterprises, regardless of size or origin, domestic or foreign. All opinions are attentively considered and not disregarded.

Expressing confidence and expectation, the Prime Minister believed that with their pivotal role in managing substantial resources and with solidarity, determination, and concerted efforts, SOEs will build upon current achievements. This includes positive outcomes observed in the first five months of the year, overcoming challenges to contribute significantly to achieving the goals of 2024: fostering growth, controlling inflation, maintaining macroeconomic stability, and ensuring economic balances. Embracing a proactive ethos of transformation and achievement, SOEs are encouraged to turn challenges into opportunities and make the impossible possible, embodying a culture of action and progress.

By Binh Minh, Vietnam Business Forum