mind, especially in the era of the booming knowledge economy like today. A real business owner needs to have the capacity and vision to be able to steer the business boat through difficult times, while directing the business into potential business areas. All of these abilities cannot be acquired suddenly but must go through years of learning, research and especially must be trained in a formal manner. However, the current weaknesses in the educational level as well as the management ability of Vietnamese enterprises cannot be overcome overnight. Experience in Japan shows that, in order to have a team of educated and truly capable corporate owners, the Japanese Government has successfully built an education system that is perhaps the best in the world. Children from the first day of school have been determined that if they want to continue to survive, there is no other way but to study and overcome challenges. Although there are still many opinions that do not highly appreciate the educational style in Japan, everyone must admit that, thanks to it, Japan can do miracles that no one living in the 40s and 50s of the 20th century could imagine. And that educational system has not only met but also exceeded the economy's demand for a highly qualified workforce.
Therefore, Vietnam needs to develop a strategy for training managers, gradually forming good, professional managers who meet the requirements of managing and operating large companies in a market economy. There needs to be a specific program and plan to retrain the current team of directors and board members. Economic groups need to cooperate with domestic and foreign universities and training institutions, proactively develop short-term, medium-term and long-term training plans for employees at all levels from high to low. At the same time, there needs to be a specific plan to train the next generation of staff. It is important to regularly classify and evaluate the team of managers in the groups, on that basis, develop a training process, and proactively arrange staff. Implement a decentralization regime for managers, appoint, dismiss, reward and discipline leaders of economic groups. All companies within the group need to be managed by a suitable personnel system in terms of educational qualifications as well as professional capabilities. This is also a
legal conditions when establishing and in the process of operating the corporation, as well as the requirement to intellectualize and specialize the leadership class of the corporations.
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Company executives, directors of finance, marketing, production, human resources and accounting must all have a degree in business administration, must have passed courses in economic ethics and have extensive economic knowledge. Only then can we ensure professional conditions, quality and at the same time create a working culture where the management team is both capable and ethical. This will create a new business civilization at a high level for economic groups. However, in the current conditions, in parallel with hiring foreign General Directors is the strategy of hiring and training Executive Directors - CEOs, Financial Directors - CFOs to meet the requirements of group development in the coming time. In the short term, it is possible to hire foreign directors to overcome management gaps, but in the long term, it is necessary to train domestic resources because no one understands the psychology, personality, consumer habits and culture of Vietnamese people better than Vietnamese human resources. In addition, there needs to be a fair competition mechanism in recruiting businessmen, on the one hand, to create opportunities for professional and capable managers, and on the other hand, to put pressure on current managers. The selection of managers needs to start from an approach to the goal of forming State corporations, as investors, determining the main goal of the economic corporation is to seek profits and enhance the brand.
Furthermore, it is necessary to change the current way of paying salaries for both teams of experts, competent managers and all employees in the direction of paying salaries based on results and work efficiency. At the same time, it is necessary to implement material incentives, social policies, and bonuses to attract talents, avoid the brain drain abroad and the trend of rushing to work at multinational corporations in the world located in Vietnam, especially in the banking and finance sectors as in the recent past.
3. Some recommendations for the Government and the State
3.1 Stabilizing the macro environment
To effectively form and develop economic groups, it is not only necessary to have modern strategies, plans and management from the groups themselves, but also to have support from a healthy economic, legal and political environment. A stable macroeconomic environment will help the development of groups more smoothly. Therefore, first of all, the State needs to stabilize the macroeconomic environment, including stabilizing the currency through interest rate policies, exchange rates, price policies... towards economic growth and development. Recent moves by the Government such as cutting the basic interest rate to 7%, widening the exchange rate band from 3% to 5%... have also shown efforts to regulate Vietnam's financial and monetary markets, but have not yet shown effectiveness. The State also needs to flexibly and synchronously use fiscal and monetary policies and other tools and policies such as budget revenue and expenditure, trade balance, ensuring balance between savings and investment... to both create stability and ensure the safety of investment capital, commit to ensuring the protection of ownership rights and other assets of investors through specific measures such as focusing on solving unemployment, corruption, poverty reduction, eliminating social evils, implementing social security policies, health care, education development, cultural stability... A stable socio-political environment is on the one hand a condition for corporations to directly benefit from its achievements such as attracting talented and healthy human resources... on the other hand, it will encourage corporations to develop their strengths, expand production and business, and make increasingly greater contributions to the economy.
3.2 Perfecting economic institutions towards abandoning the dual structure
Perfecting economic institutions not only has an impact on promoting the development of economic groups but also has a comprehensive impact on development in general. Building and perfecting institutions to support the development of economic groups, first of all, it is necessary to focus on resolving the relationships between the Party and the government, the relationship between trade unions and group leaders, the authorization mechanism, the representation mechanism, the responsibility mechanism, between different interest groups in the direction of specifying the powers and responsibilities of the parties, determining the relationships in specific cases.
Encourage the development of economic sectors by many measures, including the need to create an equal environment among economic sectors. Do not overemphasize the leading role of the State economy while underestimating other economic sectors. It is necessary to specifically identify them as leading, leading, guiding, and being typical of new technology, modern management, and high efficiency. The growth of economic sectors will inevitably form private corporations, and for these corporations, the State can only be one shareholder among many other shareholders and participate as an investor. The development of economic sectors will also create stronger connections, intertwined relationships are the premise for the formation of corporations in the future. Although representing the national economic strength, economic corporations cannot exist and develop independently, they need to cooperate and associate with other types of enterprises, including small and medium enterprises or enterprises with foreign investment capital. On the other hand, the strong development of the private economic sector in recent times is considered a driving force for the development of economic groups, especially private groups.
The Harvard-Kennedy University Policy Discussion Paper No. 2, issued on June 24, 2008, also pointed out the weaknesses of the dual-institutional economy in Vietnam and commented: “To achieve its ambitious development goals, the Vietnamese government must decide to abandon this dual-institutional structure and allocate capital on a competitive basis. In other words, a protected and subsidized state sector is not and will never be a formula for success in a globally integrated economy.” Meanwhile, the Economist Intelligence Unit (EIU) forecast also stated that “politically privileged groups may hinder reform and prevent the restructuring of some enterprises.”
"State-owned enterprises, affecting the enhancement of competitiveness and limiting Vietnam's growth results" 19. In short, the State needs to act immediately and decisively in eliminating the dual economy in order to develop the corporation model in particular and develop the economy in general.
19 Economist Intelligence unit, Vietnam: Country Forecast, September 2007, page 36
3.3 Strengthening supervision in corporations
The current state of corporate development shows that, apart from a few private corporations that operate effectively and are outward-oriented, the majority of corporations, typically State-owned economic corporations, are going against the general development trend of corporate models in the world. State-owned economic corporations in Vietnam are growing thanks to the support and monopoly from the State, operating inwardly and especially without any proper supervision from the Government and the State.
Therefore, in the coming time, the State needs to apply its strict monitoring measures to corporations. The first thing is to make the State Audit of Vietnam an independent agency, giving it full authority and capacity to regularly audit state-owned economic corporations, with a higher audit frequency. The audit reports of this agency must also be widely publicized to the public. The auditing and publication of annual audit reports also apply to the State Bank of Vietnam. In addition, it is necessary to stipulate strict sanctions for violating corporations to avoid the current loose control situation as a premise for violations to recur.
In addition, the State needs to establish a separate agency to closely monitor the investment activities of corporations, assess the level of risk and efficiency of such investments to promptly decide to recover State capital if it is not effective or there is a budget deficit.
3.4 Eliminate credit incentives from state-owned banks to state-owned economic groups
It can be seen that part of the reason for the excessive investment outside the industry in hot areas such as securities, insurance, finance... in many corporations, especially state-owned corporations, in recent times is due to the credit incentives of the State. While an effective sector, private enterprises and corporations, are thirsty for capital, credit incentives are not taken into account.
Even private enterprises and corporations with positive business results find it difficult to borrow money. Instead, the state-owned enterprise sector, headed by state-owned corporations, is given preferential treatment after preferential treatment. According to the General Statistics Office in 2007, state-owned enterprises hold 80% of domestic banks' credit capital; 70% of foreign loans, while only generating 40% of GDP20 , not to mention that a large part of that 40% of GDP is obtained thanks to the privilege of exploiting national resources. Not only that, this capital source is preferential and guaranteed by the State. Therefore, the situation of excess capital and cheap capital mobilization is common in state-owned corporations, leading to the inevitable consequence of spreading investment across risky sectors to earn immediate profits while creating inflationary pressure for the Government. Therefore, the optimal solution at present to promote the healthy development of economic groups in Vietnam is to end the guarantee for domestic and international loans, and eliminate credit incentives for state-owned groups. To tighten the supply of preferential capital, the best measure is to let state-owned groups take responsibility for providing capital based on their production and business efficiency. The government must always be ready to treat state-owned groups as equal to other enterprises, and be ready to dissolve them if they suffer excessive losses. In addition, it is possible to stipulate that state-owned enterprises wishing to issue debt must have the participation of at least 10% of foreign banks on a commercial, non-preferential, guaranteed basis.
3.5 Amendment of some regulations on corporate organization
For State corporations, it is necessary to amend the regulations on the type of subsidiary in which the State holds more than 50% of shares. Currently, this type is still considered a State enterprise, subject to the adjustment of the State Enterprise Law of 2003 on some contents, which will create the premise of inequality. Moreover, these types are not attractive to investors because they believe that this is still a type of State-controlled enterprise and would not be foolish to invest in enterprises run by the State. The Government needs to clearly define sensitive sectors and fields, which have
20 Policy Discussion Paper No. 2, Harvard University – Kennedy School, June 24, 2008, page 11
Only when it seriously affects the economy, it is necessary to maintain the controlling share ratio, industries that are not allowed to sell shares to foreign investors, industries with limited ratios..., to overcome the situation where some companies do not want the presence of foreign investors for various reasons.
In addition, there should be more specific regulations to create a foundation for the transformation of independent enterprises and member enterprises of the group, such as the State group being allowed to take over and buy back independent State enterprises, regulations allowing foreign investors to buy large numbers of shares, including controlling shares in certain industries and fields, forcing companies listed on the stock market to apply modern management methods under the guidance of the State Securities Commission and be responsible for financial statements.
Restrictive regulations on converting State-owned enterprises into single-member limited liability companies. Although in theory, this form of company will operate under the 2005 Enterprise Law like other forms of limited liability companies, it cannot escape administrative and management influences. Converting State-owned enterprises into single-member limited liability companies cannot overcome the partial nature of State-owned enterprises, cannot contribute to innovation in management style, and cannot reduce the direct intervention of State agencies in production and business activities. Currently, the pilot corporations have a large number of member companies that are limited liability companies, such as the Coal and Minerals Group with 16 state-owned enterprises holding 100% of capital in the form of single-member limited liability companies, the Textile and Garment Group has 7, the Electricity Group has 11... At the same time, the number of state-owned enterprises holding more than 50% of capital is quite large, in which many enterprises do not need to maintain the above ratio, proving that the State still wants to maintain its intervention in production and business activities. This limits the management capacity of corporations, while still confining our country's economy to a weak dual mechanism.
3.6 Perfecting the Law on Competition and Monopoly Control
Along with the process of promoting economic integration, new forms of monopoly will appear, so the Government needs to take timely adjustment measures to avoid harming the interests of consumers and the economy. In addition, the Competition Law and other related policies need to be implemented consistently to avoid excessive market privileges or power. Expand the authority, add more human resources to the Competition Management Department or establish a Competition and Monopoly Control Committee to more closely control this content. Specifically, the State needs to eliminate monopolies and business privileges of State-owned enterprises to create conditions to improve the competitiveness of corporations, create equality for private corporations and free up other economic resources. Amend the Competition Law to more clearly regulate monopoly behaviors. The current regulation lists nine acts of unfair competition, which do not cover all acts that occur in reality. For example, the case of VNPT taking advantage of its ownership of the backbone line to not meet Viettel's connection needs is clearly an anti-competitive act, clearly monopolistic but not included in any of the acts listed in the Competition Law.
In addition, monopoly can be controlled by promoting competition. Applicable measures include building a support mechanism for private corporations to develop, diversifying ownership in corporations, and encouraging foreign enterprises to participate in the Vietnamese market, participating in the fields that corporations are currently operating in, except for the Oil and Gas sector. It is necessary to separate the infrastructure in monopoly sectors from the corporations, and establish a company to manage the infrastructure such as the backbone in the telecommunications sector. This will attract economic sectors and domestic and foreign investors to participate in exploiting the backbone and compete equally with Vietnamese economic corporations.
3.7 Encourage cooperation within corporations
Based on the interests of the participating parties, businesses proactively associate to achieve goals and the State builds its policies to create favorable conditions.