Vietnam’s State-Owned Enterprises Need to Innovate and Compete for Economic Growth

State-owned enterprises (SOEs) are a sector that constructs and develops vital economic infrastructure and key industries to create motivation for economic development, especially when the private sector is not yet robust. This was the statement of Đỗ Thành Trung, Deputy Minister of Planning and Investment, at a seminar titled “State capital management in enterprises: Looking Back and Moving Forward” held in Hà Nội on Tuesday.

According to the deputy minister, SOEs hold many important resources for the country’s socio-economic development, and have made unremitting efforts during nearly 40 years of Đổi mới (Renewal), affirming their leading role in steering the economy. However, he also pointed out some shortcomings and limitations of SOEs, especially in investment activities, innovation capacity, competitiveness, and efficiency.

Vietnam’s State-Owned Enterprises Need to Innovate and Compete for Economic Growth
Vietnam’s State-Owned Enterprises Need to Innovate and Compete for Economic Growth

SOEs need to adapt to the new era and context

The deputy minister said that SOEs were slowly adapting to the new era and context. Their role in leading, motivating, paving the way, and promoting other economic sectors had not been clearly emphasised. The investment in improving innovation capacity was still limited, especially in industries capable of guiding economic structural transformation such as core technologies and digital technology; new energy industries, and clean energy.

In particular, the SOEs’ competitiveness, especially in international competition, was still restricted, as they could only dominate the domestic market but were not able to compete and penetrate foreign markets. The firms did not have key export products that would create high added value, while exports were an important criterion to most accurately assess the competitiveness of enterprises in the global market.

“SOEs have good operating efficiency but are not commensurate with their resources, especially with the total assets of more than VNĐ3.7 quadrillion of the country,” he added.

SOEs need to undertake big, difficult, and new tasks

To align with the country’s development requirements in the forthcoming period, the deputy minister said: “It is essential to identify and reassess the position and role of SOEs, thereby clarifying the objective of organising and reforming the SOE sector in line with the actual situation of Việt Nam.”

He suggested that the Government should discuss and propose directions for innovating the method of managing State capital in enterprises to promote the assignment and decentralisation of the execution of rights and responsibilities of the owner’s representative agency, particularly solutions to enhance the role of the Commission for Management of State Capital at Enterprises (CMSC).

He also urged SOEs to undertake big, difficult, and new tasks to create momentum for economic development, leaving space for the development of private enterprises in other fields. He said that SOEs should focus on strategic industries that have high spillover effects, such as infrastructure, energy, telecommunications, aviation, defence, security, science and technology.

He also emphasised the need for SOEs to improve their governance, transparency, accountability, and social responsibility; to apply advanced technology and innovation; to enhance their human resources quality and productivity; and to strengthen their cooperation and integration with domestic and foreign partners.

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