VietNamNet Bridge – The number of state-owned economic groups in Vietnam is unknown as they are vaguely defined.

According to the 2005 Enterprise Law, “economic group” is understood as a group of companies that do not have a legal entity. The understanding is in line with international practice, said Bui Van Dung, head of the Central Institute of Economic Management’s (CIEM) Enterprise Reform Committee.

Dung said the Enterprise Law states that a “economic group” means a collection of companies with a large operating scale. This definition has led to two different interpretations.

Under Decree 39, an economic group is one large group of companies, though the individual companies are not large.

Meanwhile, Decree 102 that guides the implementation of the Enterprise Law stipulates that an “economic group” is a cluster of big companies which include independent legal entities.

The Vietnamese Accounting Standard 25 says a “economic group” comprises a parent company and subsidiaries, thus leading to the understanding that there are only two levels of businesses in economic groups.

Dung said the definition of “state-owned economic group” stipulated in different documents is inconsistent. The question of how many economic groups exist remains unanswered.

“As the definition of ‘economic group’ has not been clarified, it is difficult to set up a mechanism to monitor and assess the operation of ‘economic groups’ and protect involved parties’ interests,” he noted.

Tran Tien Cuong, who is considered a leading expert on state-owned enterprises, said that state-owned enterprise reform has not made considerable progress because of the disagreement over the term ‘economic group’ in the last 10 years.

A report showed that state-owned economic groups have been growing quickly, which accounts for the overwhelming proportion of the largest corporations in Vietnam. Fifteen out of 20 of the largest Vietnamese corporations are state-owned economic groups.

The state-owned economic groups have held dominant positions in their business fields – the most important fields of the national economy. They make up 99 percent of fertilizer output, 97 percent of coal mining, and 94 percent of electricity and gas output. They hold 91 percent of the media and 88 percent of the insurance market.

Dinh Quang Ty, a member of the Central Theory Council, pointed out that many problems in the national economy had occurred in the last 10 years, and most of them were related to state-owned economic groups.

“People say problems exist in all state-owned economic groups,” he said. “Therefore, it is necessary to find out what the biggest problems are, and how they bring disadvantages to the national economy.”

TBKTSG