Key SOEs to form conglomerates

The government is formulating plans to hammer six to eight economic conglomerates from the current large state-run general corporations said deputy head of the steering committee for enterprise renovation Ho Xuan Hung.
Every conglomerate will run with its own industry specific model, according to deputy head of the SOE reform committee Ho Xuan Hung.
The committee leader, while revealing that six to eight SOE conglomerate will be formed in the future, stressed that the government will not force general corporations to transform, but will be offering incentives to those that do. According to Hung, conglomerate will be set up in some key economic sectors, including power and petroleum, coal and aviation, telecommunications and cement.
Every conglomerate will operate in one sector only, and the government is not advocating the formation of two or three conglomerate in any one economic sector. The telecommunications conglomerate is slated as the first to be set up, Hung said.
All the necessary steps for the group?s establishment have been taken, and the conglomerate is expected to be operational in the near future, once a decision by the government is signed. Regarding the model for conglomerate operation, Hung said that there will not be a common model for every conglomerate to apply.
Every conglomerate will run with its own industry specific model, Hung said adding that Vietnam would glean experience from other countries around the world, including China, which has 15 strong conglomerates, which rank among the 500 biggest in the world.
The Ministry of Construction, for example, is considering the models applied in five countries in the region for it?s conglomerate. However, conglomerate in Vietnam will have their specific character. In other countries, the conglomerate may come from family companies, while in Vietnam conglomerate will hail from big general corporation.
They will be state owned conglomerate, which carry out political and economic tasks assigned by the state. However, it does not mean the conglomerate will be 100% state owned. The state will hold the parent company in the conglomerate, but subsidiaries will be of different ownership.
There is some concern now regarding means for monopoly control, as once an conglomerate gathers strength in the market, it may flex too much control in major economic sectors.
Every conglomerate will have its specific financial mechanism approved by the Ministry of Finance, and specific operation charters approved by the prime minister, Hung said. Besides that, anti-monopoly and proper competition laws are being drawn up to resolve any such issues.
According to Hung, there are now 98 general corporations, of which just half at 55 are currently considered to be competitive.

 

Category: Legal