Productivity of private sector ranks lowest: report

07-Sep-2019 Intellasia | Vietnamnet | 6:02 AM Print This Post

The state-owned economic sector ranks first in terms of productivity, followed by foreign invested companies. The productivity of the private sector is the lowest.

The general Statistical Office (GSO) has released a report about the productivity of enterprises of different economic sectors in 2017. If calculating in accordance with current prices, the average productivity is VND298.7 million per worker.

The productivity of state-owned enterprises (SOEs) is VND678.1 million. It is VND330.8 million for FIEs, and VND228.4 million for non-state economic sector.

Mining has been leading in terms of productivity for many years.

Bui Trinh, an economist, noted that the productivity of mining, electricity production and distribution, and real estate trading is15.9-19 times higher than the average productivity of the whole economy.

The mining sector has the highest productivity because this is a special industry and the value of products includes value of natural resources.

Commenting about the high productivity of SOEs, VEPR Institute pointed out that this is not because SOEs perform better or have outstanding features, but because they can access preferences in capital and technology and enjoy a monopoly.

Mai Duc Chinh, former deputy chair of the Vietnam Labour Union, also said SOEs’ productivity is high because the enterprises have advantages in resource allocation, especially natural resources.

As for the foreign invested economic sector, analysts say, though the capital use efficiency of the sector is high, its contribution to the national economy remains modest.

FIEs are the major driving force for Vietnam’s exports as most exports are from FIEs. However, analysts said the exports mostly benefit foreign countries.

The average GDP growth rate in 2007-2017 if calculating based on current prices is 22 percent, while the cash outflow is 32 percent, which means that the ratio of GNI to GDP decreased from 97.2 percent in 2000 to 95.2 percent in 2017. So, while the GDP has increased, the country’s resources have been lost.

Chinh said FIEs make up 70 percent of total exports, mostly from Samsung and some large corporations. However, the proportion of locally made input materials that enterprises use is much lower than in other regional countries.

Meanwhile, the private sector comprises small and micro enterprises, uses backward technology and has low management level. The economic sector has only received support from the state in recent years.

Mac Van Tien from the Ministry of Labour, Ward Invalids and Social Affairs (MOLISA) noted that though the state-owned economic sector has the highest productivity, it still incurs losses in many business fields, especially in power, petroleum and minerals.

Economists suggest using private capital for power transmission lines

07/Sep/2019 Intellasia| Vietnamnet

Private capital is the best solution for upgrading of power transmission lines, which have traditionally been funded by the state.

A series of solar power projects with total capacity of thousands of megawatts have been put into operation in the ‘energy metropolises’ of Binh Thuan and Ninh Thuan.

However, the electricity generated by the plants cannot be transmitted throughout the country because of the weak transmission network.

According to EVN, in the first six months of 2019 alone, nearly 90 solar power plants became operational with total designed capacity of 4,500 MW. The electricity output is far beyond the transmission line’s capacity.

Dang Van Thanh, director of the Ninh Thuan provincial Industry and Trade Department, said only 800 MW of electricity can be provided to the national grid. Meanwhile, the local power plants can provide 1,180 MW of solar and wind power.

Most of the projects related to transmission lines approved by the PM in the seventh national power development plan will only be implemented after 2020.

To avoid overloading the transmission network, EVN has requested power and wind power plants to generate electricity in turns. This means that plants can run at 70 percent of designed capacity only.

However, analysts say this is not the feasible solution for long term. The owners of the power plants, which poured hundreds of million of dollars into power plants prior to June 30 to be able to enjoy the preferential selling price, will suffer losses from this.

Meanwhile, they have signed contracts under which EVN commits to buy electricity from them.

EVN also suffers loss when it requests power plants to provide electricity in turns. Because of the domestic shortage, EVN has to import thousands of megawatt of electricity from China each year.

The solar power price is more expensive than hydraulic power (VND2,086 per kWh), but it is still cheaper than oil-fired electricity (VND3,000-5,000 per kWh). EVN several days ago complained that it had to use oil to generate electricity to satisfy the high demand on hot days, which led to higher electricity production cost.

Developing infrastructure for transmission network is one of the most costly items in the power value chain. It costs a lot of money and time for site clearance. Investors will have to ask for PM’s permission if just one square metre of natural forest is used.

To date, all the transmission line projects are undertaken by EVN. However, it has recently suggested allowing private investors to contribute capital to upgrade the existing transmission networks.


Category: Business, Vietnam

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