Lesson 2: There is a need to regulate the Corporate and State Capital Management Committee by law
Whether the enterprise’s billions of dong worth of national capital is used effectively depends largely on the capacity and operating mechanism of the owner’s representative body.
Nguyen Van Phuc Former Vice Chairman of the Committee Economic Council talk to reporters Investment e-newspaper – Baodautu.vn.
Information on the performance of the nine groups and enterprises under the Corporate and State Capital Management Committee in the first 19 months of this year is very positive. All businesses are profitable and pre-tax profits exceed annual plans. Companies are making a lot of efforts. How do you view the role of the National Capital Management Committee in companies?
The policy of separating national capital management and state management is correct. Because according to the Constitution, the state has two roles. First, implement a master system in which all citizens represent the state according to the constitution and represent the master. Here, it is necessary to understand that the representative state consists of the National Assembly, the National Assembly, and the National Assembly. Government, local agencies. On the other hand, the state manages the country. That is, it performs state management functions such as licensing and sanctions.
When these two functions are performed and implemented in a mixed manner, it reduces transparency and sometimes leads to unfair competition between government departments and companies. Our country’s economy is a multi-sectoral market economy, including state-run enterprises, private enterprises, and foreign-invested enterprises, but according to the law, all entities are equal before the law.
Therefore, if one organization takes on two roles that are not at all equal, it will be difficult to achieve healthy competition. For example, state agencies can easily prioritize project access for the enterprises they manage.
Separating national capital owner representatives and national management agencies is a policy that has existed for a long time, but began to be implemented in earnest with the establishment of the Corporate and State Capital Management Committee in 2018.
At first, the committee’s activities were chaotic and fraught with many difficulties, but gradually they progressed smoothly and “forced” companies to comply with the provisions of the law. They play a big role in appointing senior personnel, managing capital, and providing input on business investment projects.
But there are also some controversial questions. For example, to what extent does the company’s National Capital Management Committee manage the company? What is management as an owner?
So, to what extent do you think the National Capital Management Committee manages companies?
Corporate involvement in the committee model is transparent. In other words, the committee does not intervene deeply in management activities.
This is an important objective of the reform, especially since institutions representing capital owners cannot intervene deeply in corporate governance. If you intervene deeply and disable the board and board of directors of a company, it will not be able to operate.
My observation is that national capital is better monitored and used for the right purposes.
However, the effectiveness of this mechanism largely depends on its ability to represent capital owners and select and appoint personnel to the boards, boards and supervisory boards of enterprises holding state capital. These people must be people with management capabilities and qualifications, not simply administrative people. If management rights are granted to them, decentralization and power distribution must occur.
However, if you have a professional committee, you should ensure that it is still better than the ministry’s corporate governance department. Because through their efforts and work, they gradually become proficient in their work and initially bring about efficiency.
Is there any concern if the Corporate and State Capital Management Committee cannot or does not have the power to deeply intervene in companies?
You have to make sure that there is always risk in business and sometimes you lose money and sometimes you make profit. Managing national capital means monitoring companies. How does the board of directors appointed by the committee and the board of directors manage the company, and how does the general manager run the company? Did the business suffer a loss due to objective reasons or management issues? If it is a personnel issue, the committee must be replaced immediately and must be able to do so. Ultimately, capital management is a people issue, and success or failure depends on people.
Therefore, we hope that the law replacing the ongoing Law on Management and Use of State Capital Invested in Production and Business of Enterprises (Law 69) will have specific provisions for the State Capital Management Committee of Vietnamese enterprises. And more specific regulations should be provided for this committee. The law must also ensure that state-owned enterprises can actively invest in production and business in accordance with the Enterprise Law and other laws.
Representatives of state capital ownership have monitoring mechanisms in place, including appointing people, reporting, and appointing people to sit on the board of directors, board of directors, and supervisory committees. If multi-industry investment companies should blow the whistle, but if they’re doing the right thing, let them.
He mentioned the characteristics of specialized institutions representing national capital ownership. It seems like there are still varying opinions about the agency’s operating model?
Personally, I think that after 6 years of running the National Capital Management Committee in a company, we need to summarize the experience, learn from it, and complete the model. Need to know if this model is effective? Can national capital be managed?
The reality was that there were still difficulties at first, but now we can confirm that this model is accurate. Once the claim is correct, it needs to be upgraded. This is because national capital still accounts for a large portion.
Law 2014 of 1969 stipulates that there must be a specialized agency to manage national capital. Any replacement legal instrument being drafted should clearly define the duties and powers of the Commission. It will be difficult for this model to operate effectively unless regulations on capital agency agencies are legislated and strengthened and the government is not delegated to regulate them by law.
