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Plan for establishing ‘super committee’ to oversee Vietnam’s state companies raises doubts

Thursday, July 21, 2016, 18:35 GMT+7

A plan to establish a ‘super committee’ to take over the role of the government to manage state-owned enterprises (SOE) has met with skepticism shortly after it was unveiled last week.

The Ministry of Planning and Investment announced a draft decree on Friday to set up what experts say will be a ‘super committee,’ responsible for overseeing a huge number of state enterprises.

The document was prepared by the ministry’s Central Institute for Economic Management (CIEM).

According to the draft plan, the new committee, to be fully named the Committee for Managing and Overseeing State Holdings at Enterprises, will be a government-run entity with a huge role: helping the government manage and supervise the state holdings and assets of SOEs.

State companies are currently under the management of various ministries, depending on their field of business. For instance, the country’s oil and gas behemoth PetroVietnam and the power monopoly EVN are managed by the government via the Ministry of Industry and Trade. Similarly, the telecom giant VNPT is run by the Ministry of Information and Communications.

However, the current management model has proven to contain several drawbacks.

A ministry is sometimes in charge of multiple companies, which can lead to weak or ineffective management.

Moreover, the ministry will in some cases be ‘the judge in its own case’ if it has to exercise its regulatory role.

These are cases in which a ministry has to release a new policy or regulation that may adversely affect the same state company it is overseeing.

Separating the roles of the ministries over the state companies is therefore a must, and transferring responsibility to an independent committee seems a feasible solution, according to the CIEM.

“Once established, the new committee will help prevent government capital from being wasted on major loss-making projects,” said CIEM director Tran Dinh Cung.

Doubts and concerns

Some experts have voiced support for the plan, but these are outnumbered by those who believe there is little likelihood that it can work.

Pham Chi Lan, a seasoned economic expert, said the idea of separating state businesses from their supervisory ministries is a good one, as it would bar the ministries from being the judge in their own cases.

However, Lan said it is not simple to realize the plan. “Why not set up a new ministry to do the task, instead of a committee-level entity,” she told Tuoi Tre (Youth) newspaper on Saturday.

The expert said that with a committee, where decisions are made on consensual basis, it is hard to find someone responsible in case of mistakes, whereas in the ministry, it is the minister who will be held accountable.

“We may have to send top officials from ministries to be high-ranking members of the new committee, and so nothing is changed,” she added.

Those concerns are shared by Dr. Do Thien Anh Tuan, a lecturer of the Fulbright Economic Teaching Program.

“Ministry officials will take on new roles on the committee to be set up, which means there is no real separation of the managerial and regulatory roles of ministries over state companies,” he explained.

Pham Dinh Soan, former head of the corporate finance agency under the Ministry of Finance, also said the new committee may not work, as Vietnam used to have a general department to oversee state holdings, but “eventually it had to be dissolved because of poor performance.”

Soan added it was not really necessary to have a new entity to manage the state capital, at a time when Vietnam is trying to reduce the number of state companies.

“What’s more necessary is to continue withdrawing government-owned capital from state companies,” he said.

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