Reimagining State-Owned Enterprises: A Shift towards Group Structures

Ho Chi minh City is contemplating a significant conversion of its state-owned enterprise (SOE) landscape. City officials, led by chairman Nguyen Banzok and Vice Chairman Nguyen Van Jung of teh Ho Chi Minh City People’s Committee, recently convened to address persistent challenges and explore avenues for enhancing the operational effectiveness of SOEs under their jurisdiction.The central theme of the discussion revolved around transitioning from outdated corporate models to more dynamic and competitive group structures.

The Case for Change: Outdated Models and the Need for Competitiveness

The impetus for this potential overhaul stems from a growing recognition that the existing corporate framework is no longer adequate for the demands of a rapidly evolving global economy. Palmi Hoa, president of Saigon agricultural Corporation, echoed this sentiment, asserting that the current structure restricts growth and innovation.Hoa argued that while corporate models served a purpose decades ago, they are now primarily suited for the private sector.

The current corporate model is only suitable for the private sector.
Palmi Hoa, president of Saigon Agricultural Corporation

The proposed solution involves consolidating SOEs into larger, more powerful groups. This consolidation aims to achieve economies of scale, foster greater competitiveness, and position Ho Chi Minh City’s SOEs as leaders in their respective industries. This strategic move is envisioned as a catalyst for propelling the city into a new era of economic prosperity.

Addressing Overlap and Streamlining Operations

Le Huynh Minh Tu, deputy director of the Ministry of Trade, Industry and Energy, highlighted the issue of overlapping functions within various industrial sectors. Tu emphasized that integrating these disparate units and establishing cohesive corporate entities is crucial for effectively restructuring SOEs. This approach aligns with broader efforts to optimize resource allocation and eliminate redundancies within the state-owned sector.

navigating Restructuring: A balancing Act

While acknowledging the significant contributions of SOEs to Ho Chi Minh City’s stability and development, Vice Chairman Nguyen Van Jung stressed the need for continuous adaptation and innovation. He noted that the city has undergone several phases of restructuring and equitization of SOEs, yet challenges persist. Despite active efforts to promote restructuring projects, implementation has been slow, and some companies have yet to finalize the necessary documentation.

The city’s leadership recognizes the urgency of this matter. The goal is to create prominent, recognizable SOEs that can serve as flagship enterprises for Ho Chi Minh City. Departments have been tasked with reviewing and advising on this issue,with the aim of identifying suitable candidates for consolidation and restructuring.

Prioritizing Public Interest and Avoiding Pitfalls

Chairman Nguyen Banzok underscored the importance of prioritizing the interests of the city and its residents throughout the restructuring process. He cautioned against simply following trends and emphasized the need for effective solutions that prevent the transfer of public assets to the private sector. The ultimate objective is to create stronger, more efficient, and more easily managed organizations.

The interests of the cities and the people should be prioritized, and the public should avoid the fall into the private sector. Such measures should be effective, should not follow the trend, and should not waste public assets.
Nguyen Banzok, chairman of the Ho Chi Minh City People’s Committee

Drawing inspiration from successful SOEs like Beansmax Binzon, Chairman Banzok envisions Ho Chi Minh City having its own iconic brand. He believes that a well-executed restructuring of SOEs is essential to achieving this vision.

Timeline and Key Considerations

chairman Banzok has directed the Ministry of Finance to develop a extensive project for reorganizing SOEs into a group model, with a target completion date of September and submission to all relevant authorities in October. The scope of this project will encompass a new vision for Ho Chi minh City’s SOE landscape.Assigned departments are tasked with collaborating with key stakeholders, such as Beans Unsung and Baria Bung Taewoong, to study and develop these projects.

Key considerations for the project include:

• Analyzing internal business models
• Classifying and grouping similar businesses
• Exploring the establishment of a financial company, possibly a bank, to enhance operational efficiency