The External Impact of Public Service and Product Management Policies at Public Service Enterprises on Technological Innovation Activities

workers; managed by the legal system and regulated through the system of economic levers. Today, the role of the State is changing rapidly in most developing countries. The role of the State as the owner of the main means of production, the producer and distributor of essential goods and services is being reconsidered in many areas. However, the equitization of state-owned enterprises is still slow, some specific state-owned enterprises are still controlled by the state while the management method based on output has not changed significantly. The issue of unit prices and norms according to state regulations still restricts the ability of state-owned enterprises to operate in a dynamic economy . The worrying thing here is that state sponsorship combined with the method of output management leads to the effectiveness of state-owned enterprises' operations always being a big question mark for society when costs are high, resources are large but the products and services provided are not commensurate. Some businesses even make many mistakes during their operations:

"Implementing the direction of the City People's Committee, the Department coordinated to inspect public service units and enterprises with 100% state capital. After inspecting 8 units, most of them were found to have violations. The important violation here is that the comrades in these public service enterprises signed seasonal contracts, that is, less than 3 months, for many workers, while they were eligible for indefinite contracts. Their work is regular labor, year after year, but the contracts were signed for less than 3 months to avoid paying social insurance and health insurance, only the salary in the labor contract. In addition, workers who are eligible to sign indefinite contracts are also signed with fixed-term contracts." "Using the salary fund of workers to pay salaries and rewards for management officials. This is wrong both financially and ethically."

Representative of Department of Labor, War Invalids and Social Affairs

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The above analysis shows the answer to the inappropriateness of the output-based management method applied to current DNCIs. Without a change in management method, the operating results of DNCIs will hardly improve in the coming years, and the shortcomings will still exist as in the case of District 2 Public Service LLC:

- The operation of closed waste compaction stations has not yet been issued by state authorities regarding the norms and state unit prices for operation according to regulations. The operating costs of the past years are still pending and cannot be settled with the state budget.

- Currently, District 2 still has financial difficulties to invest in medical waste storage facilities as required by the City Department of Health under Chapter 4, Article 16 of Decision 43/207/QD-BYT dated November 30, 2007 on promulgating regulations on medical solid waste management.

- The waste collection and transportation vehicles invested in a long time ago are now old and often damaged, while the depreciation cost is often low, so using this source to reinvest in new vehicles is often not enough to compensate, causing a capital shortage.

- The company has stepped up garbage collection to many households, however, because the private garbage collection force accounts for the majority of the district, these units do not collect fees in accordance with Decision 88/2008/QD-UBND, the quality of service is not good. Meanwhile, the competent authority (People's Committee of the ward, commune) has not been able to manage these private garbage collection forces, leading to low satisfaction level of the people.

- There is no clear decentralization of garbage collection and removal on rivers and canals, causing garbage pollution on rivers and canals, obstructing the flow, and affecting the living environment .

Aware of the existing difficulties, enterprises completely lack autonomy in resolving arising problems. If we only rely on state funding to thoroughly resolve these activities, it will never be enough. If DNCI is still controlled by input resources and input plans, the improvement in the quality of operations will still be a long-term problem. In addition, this management method does not encourage technological innovation activities at DNCI because of the budget subsidies as well as the inefficiency of the market with monopoly colors.

In 2013, Ho Chi Minh City discovered many violations at 4 public service enterprises, including: Urban Drainage Company Limited, Saigon Traffic Construction Company Limited, Public Lighting Company Limited and Green Parks Company Limited. The violations of these enterprises were paying salaries and bonuses to managers exceeding regulations by billions of VND/year. Explaining this, a leader who received a "huge salary" said that it was because the enterprise was making good profits. However, according to experts, it was the monopoly mechanism in implementing public services that helped the above 4 enterprises make high profits. Some enterprises even used less labor than they actually declared to get more money from the budget.

Nguyen Phan, “Anti-monopoly of public services”

Lao Dong Newspaper

According to the results of the implementation of the tasks of 2 case studies in the period 2012-2015, in these companies, only a few small initiatives in technology appeared, there was only 1 case of technology transfer but it was not successful.

Urban Drainage One Member Co., Ltd.: The company has also actively participated in researching and finding new solutions to improve management tools, increase labor productivity, save costs and increase efficiency in the management and operation of the drainage system such as completing and reporting technical improvement initiatives: "Pump discharge pipe protection equipment for emergency pumping"; "Grease separator model for small and medium-sized businesses"; "Research on improving the rotary machine and mud scraper".

In addition, there is no sign of any technological innovation that can truly change the management and operation methods of the entire enterprise.

2.2.3. Peripheral impacts of public service and product management policies at public service enterprises on technological innovation activities

If the most obvious negative impacts of the output management policy on public service providers are the wasteful and ineffective use of social resources in relation to the products and services provided, the inefficiency in business operations, and the reduction in the need for technological innovation in production, then the peripheral impacts of this policy are seen in terms of psychological dependence and lack of development motivation for the entire public service sector in general.

Obviously, the state management policy for public services still has many shortcomings: lack of planning strategy and development of public service network is not synchronous and has not kept up with the requirements of socio-economic development; State investment is still scattered and dispersed; responsibilities and authority decentralization are not clear; financial management mechanism has not been innovated to meet the requirements. As a result, state-owned enterprises operating in the public service sector are still confused about the organizational model and operating mechanism. Socialization of public services is still slow, not mobilizing many social resources to participate in providing public services. There are opinions that the State has been and is performing tasks for which it does not have enough expertise to perform these tasks, as a result, the resources invested in activities have not been fully exploited. Specifically:

- Ineffective management of the infrastructure system by the State often leads to a serious shortage of public services provided. This hinders the economic and social progress of developing countries.

Disrupted electricity and water supplies and poor rural road systems have increased the costs of commercial and industrial operations. Businesses in particular often bear the brunt of this as they have no choice in terms of public infrastructure.

- In many developing countries, the loss-making SOEs have drained resources needed for other public services. However, with good governance, many developing countries have been able to generate a significant return on investment from their budgets. SOEs have high costs, which are not commensurate with the resources of the domestic capital market. Instead, if these companies make profits, they can contribute to increasing domestic capital mobilization and attracting foreign capital.

- The State has issued a series of regulations to protect inefficient enterprises from competition that has negatively affected society through many forms such as increasing input costs... Along with the general trend and requirements for innovation in financial management models and accompanying financial policies such as policies on capital, capital preservation, costs, prices and revenues, policies on profits and profit distribution for state-owned enterprises, enterprises also require corresponding innovation. In order to encourage enterprises to constantly improve management to reduce costs, strive for profitable business, and create a healthy competitive environment, the State needs to have policies to create conditions for these enterprises to be more proactive in production and business, have the ability to be proactive in finance, and have a satisfactory profit level for each type of enterprise, in each specific field. It can be seen that DNCI is also a state-owned enterprise, so in addition to the obligations and rights of a state-owned enterprise, DNCI still needs to carry out other business activities as prescribed by the Enterprise Law as a purely business enterprise.

CHAPTER 3. POLICY ORIENTATIONS ON OUTPUT PRODUCT MANAGEMENT AND SOME SOLUTIONS TO PROMOTE TECHNOLOGICAL INNOVATION

IN PUBLIC BUSINESS ENTERPRISES.

3.1. Viewpoints on output management policy to promote technological innovation activities of public utility enterprises

Faced with the current outdated management methods in SOEs, reforming SOEs has become extremely urgent, especially in the context of international and regional economic integration. The requirement is to adjust SOEs to have a reasonable structure, focusing on key industries, fields and important areas; diversify ownership, shift from sole state ownership to multiple ownership, including private ownership, with the goal of effectively using the labor force and technical facilities, developing production and business. Resolution 3 of the 9th Central Committee decided that by 2005, the arrangement and adjustment of the existing SOE structure must be basically completed, through forms such as equitization, conversion of a number of enterprises or enterprises under political organizations, socio-political organizations into the form of single-member limited liability companies, mergers, dissolution, bankruptcy, assignment, sale, business contracting, and leasing.

In that trend, the output product management policy for public enterprises to promote technological innovation activities must be based on the philosophy of the output system governing all management activities. State management units do not need to manage costs, do not need to have norms or unit prices (based on determining minimum costs and prices), only need to manage the quality of output products (by specific criteria).

The results of interviews with leaders of some enterprises show that the current requirement of management based on output products is suitable for the development trend of enterprises, increases autonomy for managers and ensures meeting the needs of society for products and services.

Some specific viewpoints of output management policy for enterprises to improve operational capacity as well as promote technological innovation in business development:

 Management starts from identifying the desired product, determining the expected output and thereby aiming to calculate the input factors to determine the appropriate budget and resource allocation.

 Output management plans are established based on a close combination of medium-term goals and actual needs.

 Management efficiency is measured in terms of the types of products and services provided, for example the budget is determined by the prices paid for the outputs provided.

 Effective control of management by products and outputs in conjunction with original plans, policy objectives and social needs.

 Management with supervision and support from state agencies instead of the current direct management and direction mechanism.

 Managers are given high autonomy in managing output products.

Output management contributes to innovation in resource management policies of the public sector in general and of public service providers in particular, aiming to solve the basic problems: effectively allocating financial resources according to strategic priority goals and improving operational efficiency in providing public services and products. From improving the operational quality of public service providers to creating motivation for technological innovation to maintain the competitiveness of these enterprises in the market is inevitable.

Meaning of output management policy:

DNCI and the state management according to output products will have useful information.

Benefits:

– Determine the output for the question of which public products and services should be produced, and in what quantity and quality?

– The resources needed to ensure the production of outputs

– Examine the relationship between outputs and the contributions of outputs and expected results.

– Create momentum for DNCI's technological innovation to meet the diverse and increasingly complex needs of society.

Management by output allows the inspection, control and evaluation of budget expenditures in an open process, so that all citizens and investors can easily inspect and control, and make accurate assessments of the activities and performance of DNCI based on established goals and evaluation criteria.

3.2. Experience of some countries on output product management policy

How to manage the DNCI so that this subject can promote its effectiveness is one of the important issues on the agenda of each country because DNCI plays an essential role in building democracy. Based on a comparative study of current legal documents in five countries of the European Union (Germany, Denmark, Spain, Italy and the UK), it was concluded that the determination to ensure basic human rights is the common foundation for a unified European regulation on public services. Because public services are necessary for the implementation of basic rights, they also need to be guaranteed as firmly as the provisions of the Maastricht Treaty ensure the smooth operation of the market mechanism. This does not mean opposing public services to the market, but creating a basis to affirm the legality of state intervention to create a framework, supplement and, if necessary, adjust market mechanisms to ensure a satisfactory supply of public services. The view on public services that most developed countries agree on is that these services cannot be left to develop arbitrarily, and even more so, that business entities in a competitive field such as road transport destroy the very basic elements of their fields of operation, and that a monopoly field cannot be allowed to exploit users. Government regulation in some form is a necessary task. Because such regulation deals with important issues such as the quality and price of public services, and the conditions of competition between service providers, it is necessary to organize regulation according to models that are both strict and practical. Public services include a social aspect: ensuring the right to equal use of basic public goods at reasonable prices. It also includes a territorial aspect, through price regulation measures that allow the creation of equal enjoyment at all locations in the territory. This has in fact allowed for dealing with externalities, but what gives public service its distinctive character is its use as a tool for national strategy to create scientific and technological autonomy.

Developed countries can provide a lot of practical experience showing that the need to improve the operational efficiency of DNCI is inevitable and the method of managing output products is completely suitable with the modern management trend for SOEs in general and DNCI in particular.

1. China's experience: The Chinese government has had economic reform policies that have brought about remarkable results, and it is one of the countries with high economic growth rates in Asia. The state has focused a large amount of investment capital on building economic infrastructure, more than the existing capital from the day after liberation until 1980. With a proportion of more than 70% of the public ownership regime in the entire economy, China still maintains one of the highest economic growth rates in the world, reaching around 10% continuously for many years. Applying the open-door policy, the Chinese government has had very specific policies applied to different regions. In terms of investment in economic infrastructure, it can be said that China has boldly used quick-recovery investment methods to reinvest in infrastructure. In the last 10 years alone, the infrastructure has been built in a modern and synchronous manner from the beginning, prioritizing the construction of roads, electricity lines, lighting, water supply and drainage, planning of housing blocks, and public works first; and building offices later. One of the issues of concern in mobilizing capital for infrastructure development is the experience of Guangdong province in developing transportation. In just 10 years, according to incomplete statistics, more than 293 km of highways, thousands of km of grade I and II roads, and more than 293 km of roads have been built.

1,000 large and small bridges. Thanks to that, travel time has been shortened to about 1/3 compared to before. This result was achieved because Guangdong province applied the policy of "using roads to feed roads, using bridges to feed bridges" very early, which allows toll collection for all types of vehicles when crossing newly built and upgraded bridges or roads. In just 10 years, more than 40 billion yuan (equivalent to 5 billion USD) has been collected. Due to the good results of collecting tolls, many foreign companies have been building new roads in Guangdong. By 2000, about 1,000 km of expressways within the province and inter-provincial roads had been built. A notable point is that China has effectively used government bonds and the form of joint-stock economy to build public transport infrastructure. Large cities in China often issue shares to raise capital to build TV towers, parks, etc. For Chinese enterprises in general, the State only provides enough initial capital for the enterprise, the enterprise takes care of all other issues, including capital if additional needs arise.

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