Enhancing State Capital Ownership Representatives' role at enterprises

Enhancing State Capital Ownership Representatives’ role at enterprises

On 20/10/2015, The State Capital Investment Corporation (SCIC) hosted the Conference for The StateCapital OwnershipRepresentativesat enterprises. This is an annual conference with the aim of summarizing the performance of the state capital representatives at enterprises within a year, sharing experience in corporate governance to improve further the efficiency of the state capital and enhance the effectiveness of the enterprises operation.

Enhancing the effectiveness of enterprises operations

By 30/9/2015, SCIC has been representing the state shareholding rights in 230 enterprises with thetotal book value of the state capital approximately VND 17,000 billion(excluding investments by direct decision of the Prime Minister). The state capital management are implementing via the network of 283ownership/holding representatives.

Deputy Minister of Finance, the Chairman of SCIC gives the certificates of merit to state capital representatives’ for their distinguishing result.

Based on the new regulations promulgated by the State and the reality of applying the mechanism of the State ownership representatives in the past few years, SCIC isdrafting a new regulation for the representatives to update the new provisions issued recently by the State on the relationship between SCIC and representatives as the following principles:

“The relationship between the SCIC and the representatives is the relation between the State capital ownership representatives and the authorized representatives to ensurethe legitimate rights and interests of the State inenterprises".

To strengthen the guidance, coordination between SCIC and representatives in the implementation of shareholders’the rights in public enterprises:  SCIC has taken the leadership andcollaborate closely with representatives to exercise the rights of shareholders and capital contributors incompanies. The representatives have directly managed the operation of enterprises to have an effective contribution of dividends to the State, and raise the value of thestate capital investment in enterprises.

Recently, despite of difficulties in macro-economicsituation,many companies still obtain the positive results in operation- especially those categorized by A1 group.  All 19/19 enterprises in A1 group operated with relatively high profit, 12/19 reached and exceeded the profit targets, 13/19 enterprises reached and overcame the revenue targets. Only accounting for 6.53% inthe number of total enterprises, enterprises categorizedin A1group holds approximately 54% of the total portfolio value.

Mr Lai Van Dao, CEO of SCIC remark a speech to evaluating the state capital ownership representatives’ role.

Thanks to the collaboration between SCIC and the network of Representatives in finding new markets, reducingexpense, cutting product cost, some companies gains theaverage ratio of return on equity(ROE) indicatorat 30%; especially there are some enterprises achieving the ROE of remarkably over 30% like Binh Duong Mineral and Construction JSC (30%), Vinamilk (39%), Lam Dong Pharmaceuticals (32%), Hau Giang Pharmaceuticals (32%), Thieu Nien Tien Phong Plastics JSC (37%), FPT (31%), Binh Minh Plastics (30%), Ha Giang Mechanical and Mineral JSC (46%)...As for 40 listed companies in the portfolio, the average ROE stands at 17,2. Many companies have exceeded revenue and the profit targets, regulated by AGM, and exceeded the value of dividendsgiven for shareholders as SCIC is one of the beneficial.

Mr. Lai Van Dao, General Director of SCIC said that, according to the SCIC’s guidelines, the representatives haveimplemented successfully theproject of arrangement, reform and performance improvementSOE. Firstly, the representatives have worked closely with SCIC in selling the capital and collecting the debt in enterprises. Secondly, SCIC and the state capital ownership representative have kept contacting frequently and actively exchanging, sharing experiences and information to implement the missions given by AGM and protect the rights and interests of the State shareholders 

Complete relevant policies and mechanisms for the State capital ownership representatives.

For further promoting such achieved results and overcoming the limitations in playing the State capital ownership representatives’role, in the coming time, SCIC will actively collaborate andpropose to government agencies to complete the regulations for representatives. SCIC will also stick together withthe Prime Minister’sdecision on enhancing responsibilities of the representatives at thelarge-scale enterprises that the State needs to maintain the control. 

                                                                               Conference overall view

At the conference, delegatesalso discussed the importance to specify regulations on sanctions when the representatives make a violation, especially in cases thattheydo not comply with the direction of the owners and fulfill the obligations of the position that they have been appointed at companies. Other provisions on remuneration, allowances and the rewardmechanisms for the representatives’ achievements and contributionsto the State and Government also beconcerned and completedin the near future.