and support for other components to develop, is a tool for the state to regulate the macro economy.
- At the 8th Congress, the term state economy appeared, with a leading role that, in addition to inheriting from the 7th Congress, also added the role of solving social problems and creating the foundation for a new social regime.
- The 9th Congress, inheriting from previous congresses and separating the concepts of state economy and state-owned enterprises, the state economy plays a leading role in maintaining the socialist orientation. State-owned enterprises are an important material tool for the State to orient and regulate the macro economy, act as a core force, and contribute mainly to the state economy's leading role. Determine the policy of continuing to arrange, innovate and develop to improve the operational efficiency of the state-owned enterprise sector, and promote equitization.
- The 10th Congress, inheriting from previous congresses, continues to promote arrangement, innovation, improve efficiency and competitiveness; in which, emphasizing the solution of equitization, promoting the formation of a number of strong, multi-owned, multi-industry, multi-field economic groups and state-owned corporations; requiring innovation in the management and supervision mechanism of state-owned enterprises' operations.
- The 11th Congress, continuing to inherit the previous congresses, the 6th Central Conference of the 11th tenure: State-owned enterprises must continue to arrange, innovate and improve efficiency to have a reasonable structure, focus on key industries, fields and important areas, soon end the situation of scattered investment outside the industry and complete the divestment of state capital in enterprises with less than 50% state capital , apply advanced management, enhance autonomy, strengthen inspection and supervision, promote the role and responsibility of ownership representatives, form ownership representative organizations, and strengthen the leadership of the Party.
- The 12th Congress, continuing to inherit the previous congresses, the 5th Central Conference of the 12th tenure: continued to arrange, innovate and improve the operational efficiency of state-owned enterprises. This Conference inherited the policies of the 6th Central Conference of the 11th tenure and concretized and developed according to the new situation, building a multi-owned state economic group of regional and
world. Restructuring, innovating and improving the efficiency of state-owned enterprises on the basis of modern technology, innovation capacity and management according to international standards.
1.3. Factors affecting the improvement of the performance of state-owned enterprises
1.3.1. State management
International experience and the Party's theory on SOE reform have clearly shown that state management has a strong impact on the performance of SOEs because state management creates a business environment, invests in SOEs, and restructures SOEs, and intervenes in the operations of SOEs. If state management is good, it will create strong SOEs with high competitiveness, high labor productivity or high performance.
+ With the function of creating a business and investment environment: A complete legal system, the issuance of adequate regulations and institutions will create conditions and encourage SOEs to operate easily. On the other hand, state management also needs to focus on easily grasping the general operating situation of SOEs to come up with mechanisms and policies that are close to the practical operations of SOEs and also to easily monitor the operations of SOEs.
+ With restructuring: Restructuring is not only restructuring the capital but more importantly restructuring the governance of state-owned enterprises. Capital restructuring not only creates financial resources for enterprises to develop their business but also has the opportunity to improve corporate governance because private shareholders, especially foreign shareholders, bring advanced governance methods in the world, thereby increasing the operational efficiency of state-owned enterprises. On the other hand, the governance structure makes state-owned enterprises that have adapted to the market mechanism develop in depth and enhance their competitiveness domestically and internationally, thereby increasing efficiency. The governance structure also helps weak state-owned enterprises become stronger or more efficient, so capital restructuring is also easier because at that time, selling shares will attract outside investors, thereby creating momentum for state-owned enterprises to develop further.
+ Government intervention in SOEs: Too much intervention from the government will reduce the efficiency of SOEs, because it will have decisions that are more administrative than business, not made by experts, not closely following the operations of SOEs, the delay of decisions will be prolonged while business opportunities will not wait, investment decisions will also be ineffective, human resources will have difficulty selecting talented people... on the other hand, it will also cause bribery, corruption, waste, bureaucracy and businesses will lose autonomy in their operations and if there is too much, it will be like returning to the subsidy period, that is, only following orders from superiors, so business motivation is eliminated due to lack of initiative, direct efficiency is poor due to incorrect business, investment, human resources decisions... and when the business results of the enterprise are weak, no one takes specific responsibility. Therefore, it is necessary to separate business functions and administrative functions. The business function is carried out through a parent company or a state budget revenue management agency, which will exercise the rights and obligations as an investor according to the law and supervise and evaluate through the board of directors. The administrative function will be carried out through a government agency to issue separate policies for SOEs and supervise the performance of SOEs, build a common advanced management system for SOEs to apply and communicate and disseminate it. When the government requires SOEs to perform political and social tasks, when calculating the efficiency of SOEs, it is necessary to separate the performance of political and social tasks and the performance of normal business tasks, and the costs and resources to perform political and social tasks must be fully calculated and recorded as corresponding revenue from the government, only then can SOEs be compared and evaluated objectively with other enterprises.
1.3.2. Administration, inspection and supervision
One of the very important factors that greatly affects the operational efficiency of state-owned enterprises that the Party's research and theories emphasize and mention a lot is the management factor. It is also an urgent need for Vietnamese state-owned enterprises to change and apply new management methods in the process of reform.
way. In countries after reforming state ownership in SOEs, the goal to improve the operational efficiency of SOEs is to reform governance. To effectively reform governance, in addition to building an advanced governance system according to international standards, an indirect way is to restructure capital to attract private capital, foreign investors, and the participation of international organizations in publicizing and making information transparent and putting pressure to improve the governance system.
The Government must develop and implement a modern governance structure according to international standards for SOEs to apply to carry out management and supervision, including: Specialized agencies managing and supervising SOEs and a system of regulations on reporting, supervision, finance and accounting, human resources, information... regulating the relationship between management and shareholders, auditors participating in the board of control of large companies with an independent role, liberalizing share purchases. Reforming accounting and auditing standards according to international standards. The tasks of specialized agencies managing and supervising SOEs are: Developing policies for the development of SOEs related to supervision, improving efficiency, privatization and restructuring; Coordinating, managing, analyzing, evaluating SOEs; Reporting to the Government and proposing improvements to the operations of SOEs.
The law on state capital management should address the implementation of corporate governance, privatization, clearly define the functions of the board of directors and members, clearly define the rights and responsibilities of directors and members of the board of directors, controllers, and clearly define the benefits when achieving good business results and the responsibilities and obligations when doing business inefficiently or causing loss of assets, embezzlement, waste. The agency managing and supervising state capital should specify the implementation of good corporate governance, develop strategic business plans and reports, establish related operating organizations, etc.
The State Capital Management and Supervision Agency sets out regulations for the implementation of corporate governance such as: standards for candidates for audit committees, members' councils and directors and establishes a council to evaluate candidates; candidates also need to be politically independent or separate state enterprise managers from the civil servant and public employee regime; standardize corporate governance assessment, and
SOE governance is reviewed annually based on key performance indicators, and the state capital management and supervision agency needs to implement a socialized corporate governance education program.
To increase operational efficiency and avoid administrative interference, it is necessary to increase the independence and autonomy of the board of directors, form two separate layers of management, supervision and business operations, which are the board of directors and the board of directors, and the director cannot be a member of the board of directors. The board of directors must have at least 30% independent members (not capital representatives) and aim to also select independent directors (hired domestically or abroad) with good capacity to develop business for state-owned enterprises or select directors from sources with a lot of experience and real capacity, binding the legal obligations of the director to shareholders and strengthening the function of independent controllers; the director is hired, managed and supervised by the board of directors according to market mechanisms. Increase foreign ownership, or reputable private organizations, promote foreign investors to participate in the process of corporate governance reform; increase minority shareholder rights through shareholder activists, increase the rights of independent board members, and allow international organizations to participate in promoting transparency and economic democracy.
The World Bank (2014) believes that the board of directors plays a central role in the governance of SOEs, taking full responsibility for the preservation and development of state capital and the performance of SOEs. An effective board of directors must have highly qualified members, capable of achieving objectives, independent assessment to guide strategic development and management supervision, acting in the interests of the enterprise and without conflicts of interest, with relevant experience and expertise. To do so, it depends on the government to have clear, quality and strict regulations on the selection and dismissal of board members. The board of directors must be truly empowered to appoint and dismiss directors according to clear criteria and to manage and supervise directors to ensure
that directors are accountable to the board of directors and are fully responsible for the operations of the business to the board of directors.
A reasonable organizational and management model will positively affect the performance of the enterprise. Groups and general companies have similar organizational and management models according to the parent-subsidiary model, in which the parent company intervenes in many administrative orders in the subsidiary in production and business activities, human resources, finance, salary, etc., creating many departments, divisions, many subsidiaries, and even similar industries, causing overlapping management and competition within the industry and a lack of autonomy and decisions in favor of the enterprise, affecting the competitiveness and efficiency of the enterprise. Building a reasonable organizational and management model must be based on the criteria of optimizing the operational structure and maximizing operational efficiency, increasing competitiveness, so it is only necessary to focus on human resources, facilities, and organizations that are truly necessary and capable, while unreasonable models and organizations need to be shortened and restructured. Determining a reasonable scale from which to have an effective structure will make business coordination and competition and specialization better. State-owned enterprises are no longer a safe place for weak managers and employees, but must strive to work effectively to survive, income and compensation for managers and employees are determined according to the market and work efficiency, allowing employees to own shares, implementing a stock compensation regime to link employee interests with the company and stimulate employee motivation. State-owned enterprise reform is also based on useful experiences from the new management model of strong private economic groups, multinational corporations, which is the parent company - subsidiary model, in which subsidiaries operate in specialized fields to provide stable input for the development plan of the group. Dissolution and bankruptcy of weak units, ineffective operations affect the overall efficiency, waste resources, and reduce the competitiveness of enterprises.
Thus, the management system is evaluated through the following criteria:
Table 1.3: System of indicators for evaluating the corporate governance system
STT
Management indicators | |
1 | Performance evaluation system, reporting system |
2 | Information Disclosure |
3 | Rights and obligations of the board of members, board of directors and board of supervisors |
4 | Standards for members of the board of members, board of directors, and board of supervisors control |
5 | Independence of the Board of Directors |
6 | CEO |
7 | Foreign ownership |
8 | Independent Controller/Board Member/Administrator |
9 | Income of the board of members, board of directors and board of supervisors |
10 | Minority shareholder rights |
11 | Organizational model |
Maybe you are interested!
-
Economic group model - operations of Vietnam Oil and Gas Group in the period 2006 - 2008 and development trends - 1 -
Research on factors affecting the decision to purchase gypsum board of Huy An private trading enterprise from institutional customers in Ho Chi Minh City - 13 -
Analysis of the activities of the Petroleum Finance Company under the Vietnam Oil and Gas Group - 25 -
Group of Indicators Reflecting Factors Affecting Agribank's Agricultural Lending -
Identifying and controlling factors affecting the quality of accounting information in the environment of applying enterprise resource planning system ERP in Vietnamese enterprises - 12
(Source: Author's synthesis from scientific research) Inspection and supervision have many impacts on the efficiency of business operations. If there are too many inspection activities and assigning responsibilities, it will affect the overall operation of the business, and affect the psychology of the leader not daring to do or decide even though it is beneficial for the business. On the other hand, inspection and supervision ensure supervision of representatives and operators to comply with state regulations and not dare to do wrong. So how to inspect and supervise reasonably so that businesses can operate effectively while still being supervised. That is to limit too many inspections, only one focal point of the competent authority, strengthen the internal control function which is very practical, build complete information for inspection and supervision activities, strictly implement inspection recommendations.
Properly assessed will prevent errors and still operate effectively.
Good supervision will prevent risks, dangers and violations at SOEs, thus increasing the efficiency of SOE operations. Supervision and evaluation of SOE operations also need to be focused to avoid hindering SOE operations and limit corruption and bribery to cover up fraud and errors at SOEs. Supervision and evaluation need to have an Audit/Supervision Council consisting of experts, managers... so that the evaluation is effective, contributing to accurately reflecting the efficiency of SOE operations to develop appropriate policies and prevent violations, waste of SOE assets, and avoid risks and dangers in SOE business.
Public companies must establish an audit committee, with an independent member participating and acting as chairman, and other members from outside being independent. The tasks of the audit committee are: to improve financial reporting, to monitor good governance and corporate control, and to improve the effectiveness of management by internal audit. The view is that internal audit is better than external audit.
1.3.3. Science, technology and innovation
Daron Acemoglu and James A. Robinson (2012) argue that inefficient firms will be replaced by efficient firms in the market, and the two engines of prosperity are: technology and education. Sustainable economic development must be associated with technological innovation to increase the productivity of input factors such as capital, land, factories, labor, etc. Advanced technologies will not be improved and operate well without the education, skills, talents and know-how of workers acquired at school, at home and at work. To grow the economy, economic institutions must be able to exploit the potential of markets, encourage technological innovation, invest in human resources, mobilize the talents and skills of a large number of workers. Economic growth without widespread innovation will not be sustainable and will come to an abrupt end.
Tran Van Tho (2015) said that Vietnam's economy is not highly developed but has low efficiency, mainly based on inputs, while total factor productivity (TFP) which is a factor based on technological and management improvements is very low, in these areas.