Though private enterprises have gained a lot of publicity in recent times, Vietnam’s SOEs still have a major role in the country’s economy.

State-owned enterprises (SOEs) play an important role in Vietnam’s economy,
creating a foundation for macro-economic stability, ensuring social security, and
leading other economic sectors to develop together. According to the National Statistics
Office at the Ministry of Finance (MoF), SOEs have lower total assets and equity
than the non-State enterprise sector, but the average budget contribution represents
34.2 per cent of total budget revenue.

Significant contributions

At the “State-owned Enterprises: Improving Competitiveness and Leading Role”
forum held on November 20 in Hanoi, experts affirmed the role of SOEs in the country’s
economic development. Ms. Nguyen Thu Thuy, Deputy Director of the State-owned Enterprise
Development Department at the MoF, said the scale and growth rate of SOEs are quite
sound, reflected in revenue growth being higher than growth in assets and equity.

SOEs, including State-owned corporations and groups, continue to play a dominant
and leading role in strategic and essential sectors and fields for Vietnam’s socio-economic
development. “SOEs contribute to building and developing the necessary infrastructure
system for the economy; and promote economic restructuring towards modernization,”
she added.

Mr. Dang Huy Dong, former Deputy Minister of Planning and Investment, said
that in the orientations and policies from the Party and State, SOEs always carry
the mission of being the locomotive leading the economy. “They are present in fundamental
sectors and are an important force creating resilience when the economy faces fluctuations,”
he said. “This mission has not diminished in the country’s transformation period,
with the private economic sector being recognized and honored in an unprecedented
way today. On the contrary, it holds a greater position and role of responsibility
than ever before.”

Existing limitations

However, according to the Department of Forecasting, Statistics – Monetary
and Financial Stabilization at the State Bank of Vietnam (SBV), the SOE sector is
still facing many difficulties. Debt levels and debt-to-equity ratios at many remain
high, and capital additions in general encounter many obstacles, especially at State-owned
commercial banks.

Ms. Thuy also believes that the performance of SOEs is not yet commensurate
with their resources and development requirements. Some have been operating at a
loss for quite some time, falling into a state of financial insecurity, while
others have not optimized capital efficiency, making investment decisions when financial
capacity does not meet requirements.

In addition, the role of SOEs in leading and motivating enterprises of all
economic sectors to develop and promote links and form value-added chains remains
limited. Most SOEs operating in key and essential industries and sectors work in
a closed manner, carrying out almost all stages of the production and business process
to form an internal closed production chain, without creating many conditions for
other enterprises to participate in the production and consumption chain.

The initiative and competitiveness of SOEs in production and business activities
are also limited. Decision-making procedures are still complicated, leading to lost
investment and business opportunities. Investment activities of SOEs are still mainly
individual, lacking coordination, links, and the ability to take advantage of strengths
across various fields. They also have not participated deeply in international economic
integration and have not proactively pioneered the forming of domestic and international
value chains.

Mr. Le Quang Thuan, Head of the Department of Enterprise Development and Business
Environment at MoF’s National Institute for Economics and Finance, emphasized that
one of the biggest limitations of SOEs at the moment is the slow pace of corporate
governance innovation. Resolution No. 12-NQ/TW from the Party Central Committee
(12th tenure) on continuing to restructure, innovate, and improve the efficiency
of SOEs set out the requirement of improving governance according to international
practices, but according to Mr. Thuan, progress remains rather slow.

Improving competitiveness

In the context of Vietnam aiming to maintain double-digit growth in the 2026-2030
period and become a developed, high-income country by 2045, experts believe that
there must be reforms and measures to promote breakthrough growth for SOEs.

To improve their competitiveness, Mr. Thuan said it is necessary to ensure
the autonomy, self-responsibility, and independence of the Board of Directors in
performing assigned functions and tasks.

In addition, it is necessary to clarify the investment and business objectives
of the State owner and the operational objectives of each SOE, and to make all operations
and business results transparent. SOEs must also take the lead in implementing social
responsibility, applying science and technology, and driving digital and green transformation.

According to Mr. Dong, SOEs should operate according to market mechanisms,
with economic efficiency as the main evaluation criterion, be autonomous and self-responsible,
and compete equally with enterprises of other economic sectors according to law.
They must ensure transparency and accountability, enhance the responsibility of
the head officer, and link responsibility with the effectiveness of assigned tasks.

SOEs must also focus on key and essential areas that play a leading role and
create momentum for the rapid development of other industries, fields, and the economy.
This includes applying high technology, developing key national infrastructure projects,
and participating in important areas tied to national defense and security, as well
as sectors where enterprises from other economic groups do not invest or do not
cooperate in investing to commercialize goods, products, and services.

The arrangement, restructuring, and reform of SOEs according to market mechanisms
must be a regular and continuous process. Researching and perfecting policies and
mechanisms related to State capital investment in enterprises is also important
to increase resources for SOEs to play a leading and pioneering role in fields suited
to the new context.

Notably, it is necessary to boldly assign SOEs to pioneer in areas where the
private sector faces difficulties or lacks investment capacity, including AI, quantum
computing, green technology, and renewable energy, to name just a few. This is consistent
with the government’s orientation towards eleven strategic technology groups, including
the participation of large corporations such as PetroVietnam and Viettel. These
giants, with their financial capacity and experience in implementing large-scale
projects, are the force capable of playing a pioneering role if given sufficiently
flexible mechanisms.

“With the larger scale of the economy and the strong rise of private corporations
under Politburo Resolution No. 68, SOEs have no choice but to continue improving
their competitiveness and grow both in financial strength and business capability
to maintain and assume their role and mission as a regulatory tool, overcome shortcomings
in the market economy, and lead the way in technological breakthroughs, innovation,
and dual transformation, both green and digital,” Mr. Dong believes.

VET-Linh Ngoc