Red tape 

Dr. Nguyen Duc Van from the Enterprise Renovation Agency under the Government Office is the author of a study entitled “Some measures for hiring general directors at State-owned enterprises.” The Prime Minister in April 2004 signed a decision allowing the pilot implementation of hiring CEOs for five corporations. At the same time, the Prime Minister assigned the Ministry of Home Affairs to compile standards and recruitment regulations for CEOs; the Ministry has yet to complete the document.

At five selected corporations, four have finalized CEO hiring schemes and two of them are fulfilling CEO hiring contracts. The five State-owned corporations chosen for this pilot program include the Vietnam Shipbuilding Industry Corporation (Vinashin), the Vietnam Motor Industry Corporation (Vinamoto), and the Multi-way Transport Corporation under the Ministry of Transport, the Vietnam Construction Glass and Ceramics Corporation (Viglacera) under the Ministry of Construction, and the Vietnam Electric Equipment Corporation under the Ministry of Industry and Trade.

Many experts say the Government’s green light to SOEs to hire CEOs will give SOEs more power in selecting qualified and suitable managers rather than waiting for a chief executive appointed by senior agencies.

Actually, most of the five selected SEOs don’t do this task properly. For example, the Multi-way Transport Corporation in the central city of Da Nang was the first hiring CEO in December 2004 by re-signing employment contract with the former CEO, who had just received retirement decision. No selection or examination was held before the contract was signed.

In the fourth quarter of 2006, the second corporation completed preparation for selecting a CEO, Vinamoto. After announcing its vacancy for CEO, Vinamotor received over 10 applications from Vietnamese, Korean, Japanese and American applicants. After the first round, five left, including two current officials of Vinamotor and two outsiders, including a Vietnamese American. The final winner is Tran Quang Thanh, 47, who is currently CEO of the Hoa Binh Automobile Joint Venture (VMC). Thanh will begin his job at Vinamotor as of April 2008, with monthly salary of $2,000. Vinamotor has become the first State-owned corporation to have a hired CEO.

In the remaining corporations, everything is still on paper. Viglacera even doesn’t have a scheme and in November 2007, it had a newly appointed CEO. 

Barrier 

Doctor of economics Nguyen Quang A, who has hold CEO position at several non-State companies and joint stock banks, said hiring CEO for SOEs is an impossible mission and an unsolved problem.

He said when the State still holds 51% of stocks at SOEs, it means that the Executive Boards are also State-owned so in general, CEOs don’t have real power to make decisions for many issues. Hired CEOs, thus, are still ruled by mechanisms. To make CEO hiring effective, this policy should be applied for equitized SOEs only, where the State doesn’t own more than 49% of stocks, Dr. Nguyen Quang A said.

An expert from an international headhunter company shared this viewpoint with Dr. Quang A, saying “For a wrong problem, any solution is wrong”.

He said it is very normal for non-State companies to hire CEOs. “It is very simple, if CEOs do their job well and bring profit to companies, they are used, otherwise their contracts will be ended. But for SOEs, when they are ruled by many aspects, it is not simple for hiring CEOs,” he added.

Nguyen Quang A suggested that besides equitizing SOEs, the Government can assign the State Capital Investment Corporation (SCIC) to combine with SOEs to hire CEOs. SCIC will release recruitment regulations and take responsibility to the State about the performance of selected CEOs to avoid unnecessary influence from management agencies on hired CEOs.

Deputy Prime Minister Nguyen Sinh Hung recently signed a document on compiling a scheme recruiting and signing employment contracts with key officials in SOEs, which must be completed and reported to him in prior to October 1, 2008.

Source: TBKTVN