Revenue of 19 state-run groups, corporations equal to 20% of Vietnam GDP

Nineteen business groups and corporations under Vietnam's Commission for the Management of State Capital at Enterprises (CMSC) reported revenue of nearly $82 billion last year, equivalent to 20% of Vietnam’s GDP.

Among them, Petrovietnam and mining group Vinacomin posted record revenue.

The 19 business groups and corporations' consolidated equity hit over VND1,150 trillion ($47.18 billion) in 2022, an increase of nearly 10% from 2018 when they were transferred to the CMSC for management, according to Pham Van Son, head of the CMSC’s general department.

Their consolidated assets rose from VND2,300 trillion to nearly VND2,500 trillion ($102.56 billion), equal to 65% of the figure held by state-owned enterprises nationwide, Son told a seminar on state capital management on Tuesday.

Son said that the groups and corporations now play a dominant role in many key areas of the economy. Power plants developed by Vietnam Electricity (EVN), Petrovietnam and Vinacomin provide about 87% of electricity output for the country. In the petroleum sector, state-owned enterprises (SOEs) and their subsidiaries make up more than 84% of the retail market share.

However, he noted that large SOEs have not yet utilized their resources efficiently and have not allocated capital to the industries and fields that are driving forces of the economy. They also lack products and services in the fields of core technology and high technology that could lead the country’s economic restructuring.

Dr. Vo Tri Thanh, former deputy director of the Central Institute of Economic Management (CIEM), said that the commission must change its operating model to suit new trends.

The agency needs to reform and develop under a model similar to fund management companies, he said, noting this would fix current shortcomings in its operating and management mechanisms, and keep pace with new trends.

At the same time, the Ministry of Planning and Investment (MPI) should accelerate the piloting of the sandbox model, which gives a number of corporations investment autonomy and self-determination of salaries and bonuses to earn higher profits, he said.

"We need to learn how to monitor and set strategic goals from fund management companies around the world to ensure flexibility in state capital management," Thanh stated.

MPI Deputy Minister Do Thanh Trung said that SOEs have not developed in commensuration with the resources they hold, and lack key products and services with high added value and competitiveness that can reach the international market.

“We need to push for stronger decentralization so that state capital allocated to these businesses is used effectively,” he said, adding the CMSC needs to demonstrate its role as a conductor in coordinating and mobilizing resources for the 19 enterprises.

Trung added that SOEs must clearly identify areas and industries prioritized for investment and develop large-scale companies with pioneering and leading roles.

"SOEs should take on big, difficult and new things like offshore wind power, green hydrogen or chip manufacturing to create momentum for economic development, leaving room in other fields for private enterprises," he suggested.

Currently, the MPI is finalizing a project on developing large-scale SOEs to be submitted to competent authorities for approval, which aims to promote their role in paving the way for and leading other economic sectors.