MP Trinh Thi Tu Anh: 3 Pillars for Efficient SOEs

Strengthening the Role of the State Economy to Lead Long-term Growth

The draft Resolution on the development of the state economy, currently being constructed by the Government, is expected to create an institutional foundation for this sector to truly play a leading role.

The draft Documents submitted to the 14th National Party Congress emphasize: “Developing the state economy to truly play a leading role in ensuring major balances, strategic orientation, and leading the economy…” Currently, the Government is drafting a Resolution on the development of the state economy. This will be an important foundation to further promote the role and position of the state economy in the country’s new era.

National Assembly Deputy Trinh Thi Tu Anh (Lam Dong Delegation) expressed her views on the contents that need to be concretized in the Resolution.

Affirming the Leading Role of the State Economy

Reporter: Madam Delegate, the Government is currently drafting a Resolution on the development of the State economy. In your opinion, how should the State economy delimit its ‘subjects’?

Delegate Trinh Thi Tu Anh: The concept of “state economy” was first mentioned at the 8th National Party Congress: “Proactively innovate, develop, and improve the efficiency of the state economy and cooperative economy. The state economy plays a leading role, together with the cooperative economy gradually becoming the foundation of the economy.”

The state economy includes:

State-Owned Enterprises (SOEs).
State economic units.
The system of assets under the entire people’s ownership represented by the State as the owner.

Among them, SOEs are considered the core force of the state economy, an important material force, and a support tool for the State to regulate the economy, stabilize the macroeconomy, and contribute to promoting the socio-economic development of the country in the socialist orientation.

The leading role of the state economy and the innovation/development of SOEs have been consistently affirmed through the 9th, 10th, 11th, 12th, and 13th Party Congresses.

Therefore, I believe that drafting a Resolution on state economic development in the new situation is extremely urgent. The state economy, acting as an important material force for the State to stabilize the macroeconomy and regulate the market, needs to focus on areas where other economic sectors cannot or do not want to invest, or areas of special importance to social security and national defense/security.

This delimitation needs to be based on market principles, taking economic efficiency as the main evaluation criterion, while linking with quantifiable social goals. The State should not spread investment thinly but focus capital and assets on strategic sectors capable of leading and spreading strongly to other economic sectors, especially the private economy, specifically:

Essential, natural monopoly, and security sectors.
Strategic foundation and high-tech sectors.
Macro-regulatory and financial sectors.

SOEs must operate according to market mechanisms, compete equally, and avoid enjoying special privileges or benefits to not distort the market.

The draft Resolution needs to create a breakthrough mechanism, granting autonomy and improving governance capacity for SOEs so that they truly become effective tools of the State in realizing national development goals.

Three Pillars to Improve State Economic Efficiency

Reporter: In your opinion, what pillars should the Resolution focus on to improve the efficiency of the State economic sector?

Delegate Trinh Thi Tu Anh: To improve the efficiency of the state economic sector in accordance with its leading and guiding role, I believe the upcoming Resolution needs to focus on three main pillars that are breakthrough and systemic in nature, including: Governance, Restructuring, and Resources.

First, the Governance Pillar: Focus on improving operational capacity according to international standards, clearly separating state management from owner functions.

Consolidate a specialized agency for state capital management that operates independently, focusing on managing assets/capital and evaluating SOE efficiency, separate from specialized management ministries.
Political and public service tasks must be publicly ordered, with costs compensated according to market mechanisms, not mixed with business activities.
Increase the independence, professionalism, and accountability of the Board of Directors, especially the role of independent members.

Currently, state-owned energy enterprises are entrusted with the responsibility of ensuring energy security and guaranteeing the supply of strategic commodities that contribute to macroeconomic stability.

Second, the Restructuring Pillar: Through concentration, divestment, and innovation to ensure SOEs operate in correct core areas and have healthy financial resources for strategic investment.

The State only holds capital in the delimited areas mentioned above.
Definitively handle long-term loss-making projects; focus resources on effective and potential projects/enterprises.
Build a lean organizational model, reducing unnecessary intermediate levels; strengthen decentralization and grant autonomy to member units.
Mandatory application of digital technology and modern management to optimize processes, improve productivity and competitive efficiency.

Third, the Resources Pillar: Focus on attracting talent and ensuring capital for the long-term strategy of SOEs.

Need flexible recruitment and remuneration mechanisms according to the market for leaders and experts, especially in high-tech fields.
Apply public KPIs.
Create conditions for SOEs to mobilize capital through issuing bonds/stocks for large projects, reducing dependence on the budget and bank credit.
Improve the efficiency of using land, factories, and public assets, avoiding loss and waste.

These three pillars have a close relationship: good governance will lead to effective restructuring, thereby maximizing Resources to achieve sustainable development goals.

Creating Multi-Sector Linkage Supply Chains

Reporter: For the State economic sector to truly play a leading role, close coordination and linkage with the private sector and FDI are needed. How do you assess the orientation of forming multi-sector linkage supply chains (SOE – Private – FDI)?

Delegate Trinh Thi Tu Anh: I assess the orientation of forming multi-sector linkage supply chains (SOE – Private – FDI) as a strategic orientation, completely correct and breakthrough to improve the efficiency and leading role of the state economy in the new context. This is a model that helps Vietnam simultaneously solve three major problems: Capital, Technology, and Market.

Wire laying work is underway at VT20 of the Thang Long – Quang Ninh 500kV power line.

Accordingly:

SOEs: Play the role of “anchor” and “pathfinder,” utilizing advantages in infrastructure, assets, and strategic resources to orient the chain, set standards, and create market demand.
Domestic Private Sector: Is the driver of creativity and flexibility; forced to upgrade technology and governance when participating in the chain, thereby gradually participating deeper in the global value chain.
FDI: Plays the role of catalyst, promoting technology transfer, human resource training, and export market expansion, replacing the “oasis” FDI model.

To link effectively, the Resolution needs to design mechanisms ensuring fairness, transparency, and efficiency:

Transparent partner selection, ending “backyard” practices.
Tax and credit incentives for linkage chains achieving localization rates.
Include criteria for linkage, localization, and ESG standards in the SOE evaluation and monitoring system.

The ultimate goal is to shift the SOE – Private – FDI relationship from fragmented competition to mutually beneficial cooperation, based on FDI’s technology, the private sector’s flexibility, and the state sector’s capital and infrastructure potential.

Reporter: Thank you very much, Delegate!