Vietnam - State owned economic groups repeatedly beg for State’s support

VietNamNet Bridge – State owned economic groups, considered the motive force of the national economy, have also complained about difficulties, while repeatedly begging for the preferences from the State.

Conglomerates will live only with the State’s support

In the latest document sent to the Ministry of Finance (MOF), the national oil and gas group PetroVietnam asked for the permission to exempt the personal income tax (PIT) for the group’s officers who go abroad on business. If MOF does not accept the proposal, PetroVietnam wishes to come forward to pay the tax for the officers. However, the expenses would be counted as “reasonable expenses” when calculating corporate taxable income.

After advancing the sum of 2.9 trillion dong to localities and ministries to implement cooperation plans, PetroVietnam has asked the government to help local authorities pay debts back to it.

The information has angered the public. People say they cannot understand why such a powerful group like PetroVietnam, whose workers have the highest average income level in comparison with other economic groups (17 million dong a month), also needs support and insists on preferences.

The story of PetroVietnam has reminded people of the case of the Electricity of Vietnam (EVN). The power group in 2007 asked for the permission from the Ministry of Finance to use a huge sum of money to award to its workers. Meanwhile, the power group kept complaining about loss. It said it lacked tens of trillions of dong to develop power generation plants, insisting on raising the retail electricity prices.

The EVN’s situation was reportedly so serious that it had to “give back” the 13 thermopower plants to the government, because it could not arrange sufficient capital to implement the projects.

Of course, the proposal by EVN was not approved. The government then requested EVN to strictly follow the current laws on the corporate income tax duties and reduce the bonuses for its workers.

The Vietnam Coal and Mineral Industries Group (Vinacomin), another energy group, backed by the Vietnam Energy Association, has also asked for the favor.

In late October, the association, after citing the big difficulties incurred by “the three pillars of the national economy” Vinacomin, EVN and PetroVietnam, sent a letter to the government, saying that the energy sectors needs the government help in some fields.

VEA has said that though the coal export tariff has been reduced to 10 percent, the tariff is still higher than that in other regional countries, which has made the difficulties Vinacomin is facing more serious.

The Ministry of Industry and Trade some months ago submitted to the Prime Minister the suggested plan to rescue businesses. However, the noteworthy thing is that the measures suggested by the ministry mostly relate to the economic groups and enterprises in the industries put under the management of the ministry.

Especially, the ministry has asked for the granting of some preferential mechanisms to its conglomerates including the steel corporation, chemicals and paper corporations, EVN, Vinacomin.

Out-of-date way of thinking

Pham Chi Lan, a well-known economist, told VietNamNet that the proposals made by the economic groups show that the state owned groups still expect the subsidy from the State.

“Instead of shouldering some difficulties with the State, the state owned conglomerates are going on the opposite way,” Lan said.

Meanwhile, Lan said, the state budget is limited, especially in 2012, when a lot of enterprises have to get dissolved and unprofitable businesses do not pay corporate income tax.

The situation has become so serious that the Ministry of Finance has sought the National Assembly’s nod on the delay in implementing the wage increase plan.

Pham Huyen

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