Current State Management of Capital and Assets at Defense Economic Enterprises

implementation, the mindset of leaders and workers basically do not want to equitize because they feel that the policy is not satisfactory. Some regulations on equitization are still complicated and not clear enough. Many legal documents of the State are slow to be issued, so they still maintain the principles and regulations of previous SOEs even though they are no longer suitable, such as accounting regime, labor and salary regime, etc., or have been issued but have some inappropriate contents. There is a lack of sanctions for groups and individuals who are not proactive or responsible in this work.[44]

- Bankruptcy of enterprises is not carried out for enterprises that are insolvent because: 1) The land at the bankrupt enterprise is military land, the enterprise's assets on this land cannot be auctioned; 2) The creditors, directors, labor collectives and superiors of the enterprise do not want to carry out bankruptcy, so they have not completed the documents according to the provisions of the Bankruptcy Law; 3) The court is not interested in resolving the bankruptcy of the insolvent enterprise because they do not want to get involved in complicated and sensitive issues in the bankruptcy resolution process.

2.2.4. Current status of state management of capital and assets at defense economic enterprises

The Ministry of National Defense is the representative owner of the economic and defense enterprises and has authorized the management of state capital in the economic and defense enterprises to the Ministry of National Defense Finance Department. Currently, the function of participating in the management of state capital and assets in the economic and defense enterprises is assigned as follows:

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- The Ministry of National Defense authorizes the Finance Department to assess the annual financial support needs (supplementary capital) and allocate support expenses for military economic enterprises.

- The Ministry of National Defense coordinates with competent agencies to control the implementation of policies and financial management, accounting and auditing regimes of the National Defense Economic Enterprises; inspect financial reports, determine debt repayment capacity, and the level of preservation and development of state-owned capital at the National Defense Economic Enterprises.

- The Ministry of National Defense guides the State Economic Enterprises to inventory and evaluate assets, determine the amount of state capital; organize capital allocation to enterprises under the authorization of the Ministry of Finance.

- The Ministry of National Defense organizes the assessment and determination of enterprise value and state capital value in enterprises in cases of dissolution, bankruptcy, or ownership transfer; supervises the handling of state capital and assets in cases of division, separation, merger, consolidation, dissolution, bankruptcy, and ownership transfer of enterprises; supervises the distribution of after-tax profits and the use of funds in enterprises.

The following is the current status of state capital and asset management at national economic enterprises.

2.2.4.1 On participation in state capital management

Annually, the Ministry of National Defense submits to the Government a summary report on the current state of state-owned capital business, the current state of preserving and developing the value of investment capital and state-owned assets at defense economic enterprises.

In general, the management of state capital in national economic enterprises has not been carried out in a truly professional and effective manner. There are still many shortcomings surrounding this issue:

Firstly, in the implementation of the right to own state capital, for the KQP enterprise, the role of ownership of the Ministry of National Defense is separate from the role of direct management and operation. The implementation of the rights and obligations of the owner at the newly converted companies to the model of a single-member LLC owned by the State according to Decree 25/2010/ND-CP has not yet had any documents guiding the implementation of this Decree.

There are no regulations on the functions, tasks, powers and responsibilities of representatives and those assigned to directly manage state capital in joint stock companies; there are no policy guidelines for them, which may lead to lack of motivation to work and lack of commitment to the company.[8]

In reality, state agencies have not fulfilled their responsibilities as owners, and in some cases have even become the cause of difficulties in business operations. This imbalance between power and responsibility has led to situations where some are too strict and intervene too deeply, while others have neglected the management function of the owner.

ownership. But all have a common result of not supporting the business operations well. However, when the State-owned enterprises suffer losses or fail in business, it is difficult to clearly define the responsibilities of each entity. This shows the overlap and lack of distinction between the management policies of the State management agency and the business owner. And although the Law is clearly stated and the mechanism is available, implementation is still very difficult and slow. This is the common situation of capital management at State-owned enterprises, including State-owned enterprises.

Second, there are many focal points implementing the rights and obligations of the owner of the KTTQP enterprise, resulting in ineffective capital management, each agency does a part, no one is responsible for the implementation results, easily causing capital loss. The state capital allocated to the enterprise is decided by the enterprise itself, after use, it is reported to the representative of state capital at the enterprise, the Board of Directors/Board of Management, then it is summarized and reported to the Ministry of National Defense and relevant functional agencies. Such periodic reports are of little use, only when there are consequences of ineffective use of state capital, prolonged losses, and risk of bankruptcy, then the issue of responsibility of the state capital management agency arises.

The recent move of the Government, aiming to provide a temporary solution by issuing Official Dispatch 1626/TTg-ĐMDN implementing the management mechanism for 100% state-owned enterprises issued by the Prime Minister. In which, it is temporarily stipulated that single-member LLCs owned by the State apply the regulations on the organization of the implementation of the rights and obligations of state owners in Decree 25/2010. For state-owned economic groups, the regulations in Decree 101/2009/ND-CP apply.

However, although they have converted their models and operations according to the Enterprise Law, they are still essentially enterprises operating with 100% state capital, so the State still has to manage capital more strictly than other enterprises. The reality of capital management shows that, in the past, these enterprises had to operate within the framework of the State-owned Enterprise Law,

Now a joint stock company operates under the Enterprise Law. The State only manages the State capital in a joint stock company through the direct manager.

Third , according to current legal regulations, the mechanism for monitoring the management of state capital at state-owned enterprises can be seen through the following main channels: 1) The owner of state capital monitors the management of capital through the representative of the owner of the state-owned enterprise, which is the Ministry of National Defense (or the Board of Directors of a joint stock company and the Board of Members of a single-member LLC); 2) The owner of state capital monitors based on the financial plan, accounting regime, financial reporting statistics and auditing; 3) The owner of state capital monitors, checks and monitors through competent financial agencies the financial work of state-owned enterprises according to the provisions of law.

In fact, in the administrative supervision channels mentioned above, the State cannot promote its supervisory role over its capital assigned to the State Economic Enterprises and the efficiency of its use of that capital, although at first glance the regulations seem to have the nature of supervising State capital.

According to legal regulations, the representative of the owner of the KTQP enterprises is the Ministry of National Defense, through functional agencies and general departments, military regions, military branches... or the Board of Directors/Board of Directors to perform its duties and powers on its behalf.

Thus, by an administrative method, the management style is heavy on administrative orders, paperwork, many meetings... sometimes leading to low deterrence, prevention, and supervision. That mechanism sometimes creates an easy path for reports to be "beautified" and legalized. That mechanism also eliminates the effectiveness of inspection, examination, and supervision activities for the KTQP enterprises. Because once the KTQP enterprise is under the Ministry of National Defense, it itself has real power and "hidden power" equal to and even more powerful than the agencies assigned to perform inspection, examination, and supervision tasks.

supervision, leading to the inspection results being difficult to accurately reflect the reality of state capital management in practice. At the same time, there are times, places, agencies, organizations, and individuals with the authority to inspect and examine cannot properly and fully exercise their rights.

Fourth , weak sanctions. In the field of economic management, the law currently does not have specific sanctions for acts related to the issue of capacity in capital mobilization and use. Although the Government has issued Decree No. 09/2009/ND-CP on financial management regulations of state-owned enterprises and management of state capital invested in other enterprises (replacing Decree 199/2004/ND-CP), the Government - as the owner of state capital, seems unable to monitor the extent to which state-owned economic enterprises operate in accordance with the regulations. Thus, the financial management regulations of state-owned economic enterprises are available, but sanctions for acts related to state-owned economic management regulations are still general. Because there are no specific sanctions for each type of violation, violations are not handled promptly and thoroughly, which can easily lead to serious consequences such as huge losses of state capital and assets, as has happened in some other SOEs. Furthermore, the legal responsibility of those responsible and other related persons has not been investigated.

However, everyone knows that this action "removes" work and "reduces" the power of state agencies, ending the situation of "one neck, many shackles" that enterprises are suffering. And it seems that no ministries or branches want to give up, so the separation of ownership rights is still not possible. Of course, when this "yoke" is removed, enterprises will no longer have reasons to be entangled or limited in management to justify their weaknesses. At that time, the incentives that are causing inequality between state-owned enterprises and private enterprises will be ended.

The current state management of state capital in national defense enterprises is reflected through the results of the author's investigation as follows: There are 40/151 opinions (accounting for

26.49% said that state capital management in state-owned enterprises is being implemented well, but 53/151 respondents (accounting for 35.09%) said that state capital management in state-owned enterprises is being implemented well, but 53/151 respondents (accounting for 35.09%) said that state capital management in state-owned enterprises is being implemented well.

% ) is considered inappropriate; the mean value of the variable

X 40

=2.91. That

This shows that state management of state capital in state-owned enterprises is being implemented at a low level and is in great need of innovation.

2.2.4.2 On state asset management

At state-owned enterprises, the same asset management mechanism is still applied as with state agencies, while the activities of enterprises are diverse, state assets are not only used for military production tasks, but also for production and business activities. This gives rise to problems in the process of managing, exploiting and using public assets in the direction of diversifying activities. Another disadvantage is that the system of standards and norms for purchasing and equipping assets is still incomplete, leading to inconsistent procurement among enterprises, and the investment in construction, asset procurement and use is still wasteful and has a loss of investment funds and is redundant compared to the needs of use due to the lack of standards and norms.

The current hot spot in state asset management at defense economic enterprises is the issue of management and use of defense land. According to the Enterprise Law, enterprises, in addition to paying taxes, do not have to pay any amount to their superiors. According to the Land Law, converting defense land to economic land will have to go through many very complicated procedures and must be approved by the Prime Minister in each case. When land has become economic land, the money earned from business activities on that land must comply with the enterprise financial regime and there is no channel for it to go to the Ministry of Defense. Faced with that difficulty, the Ministry of Defense has researched, proposed to the Government and received the Government's approval to issue Circular 35 (July 20, 2009). It must be said that this is a "special" priority document but it is very reasonable and creative to ensure that money earned from using defense land for economic purposes is returned to serve defense, while still maintaining the defense land fund, at least in the planning. However,

However, there are still problems when implementing. According to this Circular, the authority to approve projects using land planned for defense purposes but not immediately used for defense tasks for economic purposes, the Ministry of Defense is the one to approve all joint venture and association projects using defense land [7]; this is very difficult to implement. Because there are many enterprises or units with small vacant land that is not used for defense purposes immediately, with conditions to put into business to generate revenue but cannot use it because it is not approved by the Ministry. Due to the small scale, short time of use is not commensurate with the project report to the Ministry for approval, on the other hand, the capacity of the Ministry of Defense agencies is limited, so it is not possible to appraise all projects. In fact, enterprises still use but do not report because of small area, short association time. This leads to many difficulties in the management of land and revenue from this land by financial agencies, which is both ineffective and uncontrollable.

The survey results in question 39 on this issue also demonstrate that: State management of state assets at national economic enterprises is being implemented in

average level with

X 40

=3.06. This conclusion suggests that further changes are needed.

To innovate the management of state assets, especially the management of military land, to make it more effective.

2.2.5. Current status of state control over defense economic enterprises

In compliance with the provisions of law, relevant State management agencies have coordinated with functional agencies of the Ministry of National Defense to periodically or suddenly conduct inspections and audits of the operations of defense economic enterprises in basic fields to orient the operations of enterprises, resolve issues arising during the operations of enterprises, control and handle violations in the implementation of provisions of law and of the Ministry of National Defense.

The Ministry of National Defense has also established a mechanism for regular, independent, and objective inspection and supervision within the Ministry of National Defense: regulating the reporting regime of the activities of the military economic enterprises; the Ministry of National Defense is responsible for organizing the supervision, inspection, and examination of the enterprises under its management in performing the tasks of serving the national defense and security and production and business activities according to the provisions of law. The State's supervision, inspection, and examination activities of the military economic enterprises are basically well implemented. Every year, the Ministry of National Defense organizes the Military Enterprise Conference, at which the production and business activities and defense services of the enterprises are evaluated; and directions and solutions for the next stage are proposed.

Regarding auditing - an activity that has long been considered as not receiving enough attention for military enterprises, there has also been much progress. After 15 years of establishment, the State Audit of Sector I (auditing the defense sector) has audited 300 military enterprises. The audit results show that, in general, military economic enterprises produce and do business profitably, create many jobs and income for workers, contribute significantly to products and services for society, and increase revenue for the State budget and the defense budget. Compliance with laws, policies, and regimes on production and business management, finance and accounting of the State has been focused on and put into order, each audit is better than the previous ones. In general, military economic enterprises have quite good business efficiency, relatively good compliance with financial discipline, regulations on production and business organization as well as compliance with accounting standards. Through auditing activities, the State Audit of Sector I has made many recommendations to the Ministry of National Defense and the Ministry of Finance on the allocation and settlement of funds according to the budget table, preventing the phenomenon of allocation based on the request-grant mechanism. According to the assessment of the State Audit, the implementation of the recommendations of the State Audit has been seriously carried out by the military enterprises. There were years when the enterprises under the Ministry of National Defense implemented 100% of the recommendations. [83]

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