The lack of autonomy is restricting state-owned enterprises (SOEs) from embarking on innovation and supporting startups.

Workers of Petrolimex Petrochemical (PLC). Photo: Hai Linh

Deputy Director General of the Enterprise Development Agency under the Ministry of Planning and Investment Nguyen Duc Trung made the statement at a conference discussing the role of state firms in economic development on March 31.

“At present, the level of efficiency in SOEs operation still remain modest and disproportionate to the amount of state capital under their disposal, while the sector’s competitiveness against international peers has left much to be desired,” Trung added.

According to Trung, the root cause for such issue come from the fact that they have not been active enough in production and business activities.

A recent study from the Vietnam Institute of Economics (VIE) revealed that as of 2020, the country has 650 SOEs. While the figure only accounted for 0.07% of number of operational enterprises in Vietnam, they made up 7% of total asset, 10% of equity and 30% of the GDP.

Along with the process of privatization, the number of state enterprises has been on the decline, but they remain a major contributor to the state budget, stated the VIE.

Director of School Business Administration under the Vietnam National University Hoang Van Hai added to further support the development of SOEs, the authorities should address legal bottlenecks, specifically the inconsistency and ambiguity in legal framework that are restricting them to apply for modern business models or corporate governance standards.

Vice Chairman of the Commission for the Management of State Capital at Enterprises (CMSC) Ho Sy Hung stressed the necessity for policy-makers to adopt new mindset in drafting regulations and creating conditions for enterprises to operate fairly against other economic components.

“Along with the strong growth of the private sector, the government should create room for large-scale SOEs to develop,” he added.

At the conference, Nguyen Quang Tuan from Viettel’s Department of Production Research said it is essential for government agencies to treat both state and private firms in a fair manner.

“The authorities should take advantage of the Industry 4.0 to enhance efficiency in supervising SOEs, at the same time giving them freedom in deciding on business strategy and operation,” Tuan noted.