Workers of State-owned VNPT installed 5G station. Vietnam set the target to have at least 25 SOEs with the market capitalisation or equity of 1 billion USD or more by 2025. (Photo: VNPT)

Hanoi (VNS/VNA) - It is critical for State-ownedenterprises (SOEs) to strengthen innovations as Vietnam has set the target ofhaving at least 25 SOEs with a market capitalisation of 1 billion USD and more.

According to Minister of Finance Ho Duc Phoc, SOEsare slow to innovate, and this means they fail to keep upwith the rapidly changing requirements of the market-based economy.  

He pointed out that the inadequate policies for managing SOEsremain a major cause of their slow innovation and confusion in developinginvestment strategies and plans.

In addition, the policies on salary and remuneration are notattractive for SOEs to attract high-quality human resources.

The legal framework for management and usage of Statecapitals at SOEs should be reviewed and improved in line with the amendments tothe Law on Bidding and the Law on Land to ensure efficiency, he said.

The recent Government report submitted to the National Assemblyrevealed that the operation efficiency of SOEs was below expectation while theinvestment efficiency of SOEs was not as high as expected when the projectswere approved.

꧑ Some projects with huge investments failed or incurred losses formany years while the restructuring plans did not work.

The report showed that State-owned enterprises saw the totalrevenue in 2021 drop by 12% against 2020. Pre-tax profit also fell by 20%. ManySOEs earned low ratio of pre-tax profit to equity, around 1-5% which was belowthe average banking deposit interest rate.

Eighty-four out of 401 SOEs reported accumulated losses for manyyears.

SOEs failed to play their role in driving the development of othersectors and promoting value chain linkage, the report wrote.

In addition, SOEs were weak in industries that affected theimprovement of the economy’s competitiveness such as high technology, precisionmechanics, component manufacturing and source technology.

Most SOEs in key and spearhead industries operated in aclose-ended manner which did not create conditions for other enterprises toparticipate in their value chains.

According to Minister of Planning and Investment Nguyen Chi Dung,SOEs needed to focus on research and development, innovation, digitaltransformation, infrastructure development and finance to create growthdrivers.

It is necessary to improve policies and mechanisms for themanagement of SOEs to enable them to operate under the market-basedmechanism, Dung said.

ܫ As of the end of last year, there were 826 SOEs, 476 of which werewholly State-owned. The total State capital at SOEs was more than 1.6quadrillion VND, up by 3% against 2020./.