Vietnam - SOEs could not be used as macroeconomic regulatory instrument

VietNamNet Bridge – State owned enterprises (SOEs) have always been defined as the motive force in the national economy and the instrument for the government to implement its macroeconomic policies. However, economists have pointed out that SOEs could not be used for that purpose.

If the government uses state owned enterprises (SOEs) as the tool to regulate the macro economy, it would have to pay a heavy price, said Vu Thanh Tu Anh from the Fulbright Economic Teaching Program at the forum on economic restructure held by the National Assembly’s Economics Committee in Da Nang City some days ago.

The participants at the forum all agree that SOEs could not be the instrument for macro economy regulation.

Commenting about the current situation of SOEs, Dr Nguyen Dinh Cung, Deputy Head of the Central Institute for Economic Management (CIEM), said that though the enterprises are considered as the tool to stabilize the macro economy, their investment efficiency and business performance have been bad. This has made the problems get more serious, while increasing the risks on the financial system.

SOEs have been defined as the “pillars” of the national economy, but they are not international competitive. Meanwhile, a lot of conglomerates and general corporations have exploited their monopoly in the business fields, dominating the domestic market, thus distorting the business environment and the society’s resources allocation.

Agreeing with Cung that the imposition of the discipline of the competitive market should be seen as the prerequisite to speed up the SOE restructuring process, former Minister of Trade Truong Dinh Tuyen said that it is unreasonable to use SOEs as the tool for macro economy regulation. Many times he repeated the viewpoint in a short speech which lasted several minutes only.

In the last many years, SOEs have been used by the government as the tool to stabilize the markets and prices. When the market fluctuations are too heavy, the State would ask state owned corporations, which hold big market shares and have influences on the market, to keep sale prices stable.

Meanwhile, Anh from Fulbright program believes once the prices are suppressed for a long time, this may lead to an “explosion” one day, when the prices skyrocket, thus causing shocks to the national economy.

Anh also said that SOEs have been snatching the opportunities of the enterprises from other economic sectors. The SOEs, which are believed on the upper hand in comparison with private businesses, have been racing to seek profits by exploiting their privileges. A lot of state owned conglomerates have expanded their business to the fields which do not have any relations to their core business fields.

Pham Chi Lan, a well-known economist, has also called on to rethink the role of the SOEs in the national economy. Lan said that while saying the state economy plays a leading role; this does not mean that SOEs, a part of the state economy, also play the leading role.

Lan repeatedly said that SOEs cannot lead the national economy.

While expressing her agreement with Tuyen--that SOEs could not be able to serve as the instrument to stabilize the macro economy, Lan said that regrettably, too high hope still has been put on the enterprises.

“SOEs have been causing more problems to the macro economy, rather than helping stabilize the macro economy,” Lan said.

“The government is calling for investments in supporting industries. However, no one can see the role of SOEs here,” Lan said. “SOEs have been only doing business in profitable fields. They, for example, have been trading rice and depriving farmers’ interests”.

Source: TBKTVN

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