VietNamNet
Bridge – The Ministry of Finance has
submitted to the Prime Minister--the financial monitoring mechanism applied for
state owned enterprises (SOEs) which aims to improve the SOE management
efficiency.
“If I
were the manager of a SOE, I would not dare to do anything,” said the
representative from the Vietnam Airlines Corporation at the workshop on
renovating the financial mechanism to serve the SOE restructuring process.
The
executive said that the criteria for financial monitoring the Ministry of
Finance (MOF) has suggested are not clear and sufficient.
“It’s
necessary to keep cautious when “judging” enterprises. It’s necessary to
analyze the circumstances and the history of enterprises as well, instead of
relying on annual finance reports to pick holes in SOEs’ operation,” he said,
adding that he cannot find any suggested criteria allowing to monitor SOEs’
operation applied to different business fields.
Under
the drafted financial monitoring mechanism, SOEs would be put under the special
financial monitoring, if losses are discovered at the time of making annual
finance reports, if the ratio of accounts payable on stockholder equity
exceeding the safety line (3 times), and the loss equal to 30 percent of the
stockholder equity or higher, or if the enterprise has the debt service
coverage ratio less than 0.5.
“The
same criteria should not be applied to the SOEs in different business fields,”
he said.
Analysts
have agreed that the strict financial monitoring mechanism would make SOEs’
managers shrink themselves. They would not dare to do anything for fear that
they may accidentally commit the charge of “being irresponsible, thus causing
serious consequences” in managing SOEs.
“There
is a fine line between taking loss because of risks and taking loss because of
the irresponsibility,” the executive from Vietnam Airlines said, adding that if
SOEs’ directors may be jailed just because they take loss.
Dinh
Quang Tri, Deputy General Director of the Electricity of Vietnam (EVN), has
pointed out the big problems EVN is facing when withdrawing capital from other
companies as requested by the State in order to gather strength in its core
business field.
The
gloomy stock market makes it difficult to find the stock buyers. Some
investors, who really want to buy stocks, only accept low prices. This means
that EVN would have to sell the stocks at a loss.
What
should EVN’s director do, then? Should he sell the stocks and accept loss from
the financial investment deals, for which he may be committed to prison, or
should he keep the stocks to preserve the capital?
Dr Vu
Xuan Dung from the Hanoi Trade University has pointed out that it would be
unreasonable to classify SOEs by considering the ROE (return on equity) ratio
only. In general, enterprises increase their capital every year, while it takes
at least 2-3 years to see the effectiveness of an investment project.
The
internal auditing mechanism for SOEs, which was build up in 1997 died young
just after two years of implementation. Dang Van Thanh, Chair of the Vietnamese
Accountants’ Association, believes that it is the lack of internal financial
monitoring which makes it very difficult to assess finance reports.
“Only
when SOEs lose all of their capital, or when embezzlements or wrongdoings are
discovered, will inspectors and auditors wok on the enterprises. However, it
would be too late,” Thanh said.
Pham
Duc Trung from the Central Institute of Economic Management, while affirming
the importance of the financial monitoring mechanism, said that it’s necessary
to set up criteria for every SOE, especially for state owned economic groups
and general corporations.
Source:
TBKTVN
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