Party report suggests improved state capital management

by P.V09 October 2015 Last updated at 08:37 AM - The draft report of the Communist Party of Vietnam’s Central Committee to be presented at the 12th party congress is now available for public comment.

According to the draft, the party will set up an agency to managing state capital. According to experts, if the plan is approved, the agency will address shortcomings in the use of state capital, accelerate reforms, and improve the country’s business environment.

Many economists have agreed with the plan to create an agency for the management of state capital. The draft document states the hope that state capital would be used more effectively.

According to the draft report, a specialist agency will be established to manage state capital distributed to enterprises. A central agency can operate as an intermediary to help smooth capital flows between financial institutions and enterprises.

The equitisation process of state-owned enterprises will be accelerated. Enterprises which receive state capital can operate independently from state offices and agencies as the central agency in charge of the capital allocation.

"This would reduce the interference of local governments in state enterprises. It is extremely important. For example, if a province wants to increase their GDP, instead of improving the business environment, they ask for help from the state enterprises", said Do Thien Anh Tuan, Fulbright Economics Teaching Programme.

"It ensures the transparency of the state’s involvement and provides more of a level playing field", said Dr. Nguyen Dinh Cung, Director, Central Institute for Economic Management.

About 45 billion dollars of state capital is allocated to businesses under the management of ministries, local departments and people’s committees and is often poorly used.

And some experts have suggested that reform of state-owned enterprises is vital in making better use of this investment.

"The first thing the agency should do is to restructure state-owned enterprises, then manage only enterprises that have significance for the economy", said Dr. Le Xuan Nghia, Economist.

There might have more discussions in prior to the establishment of the central agency for state capital management. But this could potentially be a solution to improve the country’s investment environment and more efficient use of state capital in the future.

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