Directive 01/2003/CT-TTg on further reorganizing, renovating, developing, and raising the efficiency of, state enterprises

DIRECTIVE

ON FURTHER REORGANIZING, RENOVATING, DEVELOPING, AND RAISING THE EFFICIENCY OF, STATE ENTERPRISES

In furtherance of the Resolution of the third plenum of the Party Central Committee (IXth Congress) on further reorganizing, renovating, developing, and raising the efficiency of, State enterprises, the Government has worked out its program of action and directed the ministries, branches, localities and State enterprises in the implementation thereof. In 2002, initial improvements were seen and a rather synchronous system of legal documents was formed for the restructure of State enterprises and raising the efficiency of operation of State corporations; the general schemes on reorganizing State enterprises were basically completed;...

However, the institutionalization of the Resolution of the third plenum of the Party Central Committee (IXth Congress) remains slow; the general schemes on reorganizing State enterprises of some ministries, branches and localities have not yet adhered to the Party Central Committee’s Resolution and the Government’s program of action; the coordination in branch- and territory-based reorganization of enterprises is not close; the consolidation of State corporations has not yet been expeditiously carried out; the tempo of reorganization and ownership conversion of State enterprises operating at a loss and enterprises with small amounts of capital and where the State needs not to hold 100% of their capital remains at a snail’s pace...

The requirement set for the five-year (2001-2005) period is to basically complete the reorganization of State enterprises in the spirit of the Resolution of the Party Central Committee’s third plenum. In 2003, concentrated direction shall be required to create an important improvement in the reorganization and renovation of State enterprises, focusing on raising the efficiency of production and business activities of corporations as well as on the equitization, assignment, sale, business contracting, lease, merger, dissolution or bankruptcy of small enterprises operating at a loss and where the State needs not to hold 100% of their capital. The Prime Minister hereby instructs:

1. The ministries, the ministerial-level agencies, the agencies attached to the Government, the People’s Committees of the provinces and centrally-run cities and the managing boards of State corporations to consider the concentrated direction of intensified implementation of the Resolution of the Party Central Committee’s third plenum and the Government’s program of action on reorganizing, renovating, developing, and raising the efficiency of, State enterprises a central task in 2003; to finalize the general schemes on reorganizing State enterprises and submit them to the Prime Minister for approval, and to devise programs, plans and solutions for the active implementation thereof; to concentrate their direction on stepping up the conversion of ownership of small State enterprises operating at a loss and where the State needs not to hold 100% of their capital according to the schemes approved by competent authorities; to settle in time difficulties and problems in the reorganization and renovation of enterprises; to consolidate the Steering Committee for Enterprise Renovation, arrange enthusiastic and professionally qualified officials to work on a full-time basis; to resolutely replace those enterprise directors who have failed to strictly observe the schemes on reorganization of enterprises. The establishment of State enterprises must be strictly controlled, ensuring their efficiency and the compliance with the Resolution of the Party Central Committee’s third plenum and the Government’s regulations.

2. In the first quarter of 2003, the ministries shall submit to the Government or the Prime Minister for promulgation legal documents according to the Government’s or the Prime Minister’s working program. Concretely as follows:

a/ The Ministry of Planning and Investment: A decree on exercising the ownership over State enterprises, which clearly defines the functions, tasks and powers of the managing boards - the owners’ direct representatives at corporations, which shall decide on the most important issues in the strategy on development and operation of corporations; a scheme on the establishment of economic groups (the second quarter of 2003), a decree amending and supplementing Decree No. 56/CP on public-utility State enterprises, and a decree on State corporations (the fourth quarter of 2003).

b/ The Ministry of Finance: A decision on the establishment of financial investment companies; a decision promulgating the Regulation on supervision and evaluation of operational efficiency of State enterprises; and a decree promulgating the Regulation on financial management and business cost-accounting applicable to State enterprises in replacement of Decree No. 59/CP and Decree No. 27/1999/ND-CP (the fourth quarter of 2003).

c/ The Ministry of the Interior: A decision promulgating standards and Regulation on recruitment examination of State enterprises’ managerial officials; a decision promulgating the Regulation on training and employment of State enterprises’ managerial officials; and policies towards directors, deputy directors and chief accountants who shall not continue to work in the reorganized State enterprises.

Together with the preparation of the above-said draft documents, the ministries shall take initiative in elaborating guidance for promulgation before the Government’s or the Prime Minister’s documents take effect.

3. The ministries, provinces and centrally-run cities, and the managing boards of State corporations to concentrate efforts on consolidating the managerial organization, removing difficulties and raising the efficiency of production and/or business activities of State corporations, to strive not to have member enterprises which poorly conduct production and/or business activities and suffer from prolonged losses by 2005.

Those State corporations which fully meet the criteria set in the Resolution of the Party Central Committee’s third plenum and the Prime Minister’s regulations should concentrate efforts on consolidating the organization and management mechanisms and stepping up development investment strictly according to the strategy and planning, especially for big and important projects already mentioned in the 2001-2005 five-year plan; raise the efficiency of their production and/or business activities; and strive to over-fulfill the 2003 plan and the 5-year plan.

For those corporations which are engaged in branches or fields where corporations should be organized by the State but the State’s capital is below the prescribed level, their remittances into the State budget are limited, together with consolidating their organization and management mechanisms, stepping up development investment, and raising the efficiency of production and/or business activities, they should devise specific plans and roadmaps in order to acquire adequate capital by 2005.

For those State corporations which fail to meet the set criteria, suffer from losses in their business activities or operate merely with an administrative style, fail to combine their products, trademarks, finance and technologies among member enterprises and between corporations and member enterprises, their managing bodies must be resolutely dissolved; and at the same time measures must be taken to consolidate and raise the dynamism, sense of responsibility and efficiency of production and/or business activities of enterprises.

For enterprises having competitive products and trademarks on the market, they should be encouraged and supported to step up the development investment, expand the production and/or business scope, then form corporations operating after the parent company-affiliated company model.

Before March 30, 2003, the ministries and localities shall submit to the Prime Minister for approval the plans for State corporations and State enterprises subject to experimental shift to operation after the parent company-affiliated company model, and organize the close direction of planned implementation thereof.

The Steering Committee for Enterprise Renovation and Development shall assume the prime responsibility and coordinate with the ministries of Post and Telecommunications; Industry; and Construction; the Post and Telecommunications Corporation; Vietnam Oil and Gas Corporation; and Vietnam Electricity Corporation in promoting research, survey and formulation of a scheme on economic groups; and at the same time coordinate with the Ministry of Communications and Transport, the managing board of the Shipbuilding Corporation and the Communications Mechanical Engineering Corporation in devising a scheme on experimentally assigning the managing boards to sign contracts with the general directors and submit it to the Prime Minister.

4. In order to equitize State enterprises strictly and efficiently, for State enterprises with capital being VND 5 billion or more, which conduct production and/or business activities with profits, when selling their shares for the first time, the State should hold equities representing at least 51% of their respective charter capital.

5. The Ministry of Finance shall assume the prime responsibility and coordinate with the concerned agencies in studying and submitting to the Prime Minister the mechanisms and policies in order to eliminate the discriminatory treatment between State enterprises and transformed State enterprises in the fields of credit, investment, land and entry and exit, thus contributing to stepping up the restructure of State enterprises.

The Steering Committee for Enterprise Renovation and Development shall have to urge, monitor and periodically report on the implementation of this Directive to the Prime Minister.