VietNamNet Bridge – The Ministry of Finance’s draft law guiding the use of State capital in enterprises will be opened to public opinion before it is submitted to the Government in July.

Workers of the state-owned liability limited Thang Long Metallic Company inspect products for export. The Ministry of Finance recently drafted a law on managing state capital in enterprises.

Deputy Minister of Finance Tran Van Hieu said the law, if approved, would help State agencies avoid losing control over enterprises they owned. It would also prevent State owners from interfering too much into their enterprises’ operations, limiting the companies’ flexibility and creativity when doing business.

Experts agreed that the law was necessary but raised concern that the scope of regulations was too narrow.

The draft bill only covers limited liability companies completely owned by the State. But it was the loose management of State-owned groups like Vinashin and Vinalines that caused the loss of trillions of dong, seriously damaging the economy. The losses caused by inefficient use of State capital would be difficult to curb if only wholly State-owned companies were covered, warned Le Dang Doanh, former director of the Central Institute for Economic Management (CIEM).

Currently, State capital granted to companies was often re-invested in their subsidiaries, so subsidiaries must be subject to the law just as their parent companies were. State capital belonged to the people, so it must be strictly controlled, Doanh stressed.

Dang Van Thanh, chairman of the Viet Nam Accounting and Auditing Association, said that internal auditing regulations would help control business risks and avoid financial mismanagement. In addition, the actions of chairmen of management boards and general directors responsible for business and production must be clearly regulated.

Vu Nhu Thang, director of the Ministry of Finance's Financial Strategy and Policy Institute, said that if State capital invested in enterprises was re-invested in businesses beyond their core operations, it must be strictly managed.

Doanh agreed, saying that enterprises must regularly report operation results, as modern corporate governance required high transparency and accountability. He added that the law should also regulate how staff are recruited to ensure that qualified people are hired to deal with State funds.

Source: VNS