The ministry is drafting a government decree stipulating the capital contribution of state owned enterprises (SOEs) to other enterprises, under which SOEs can only make capital contribution to one enterprise in every field of banking, insurance and securities. The total capital to be contributed must not be higher than 10 percent of the chartered capital of the institutions that receive capital contribution. Meanwhile, the total investment capital in the fields must not be higher than 10 percent of the stockholder equity of enterprises.

If the holding companies and subsidiaries of the same economic groups all make investment in the above said business fields, the total capital contribution of all the holding companies and subsidiaries must not be higher than 15 percent of the chartered capital of the institutions that receive capital contribution. In special cases, higher capital contribution proportions would be acquired only by the approval of the Prime Minister.

Meanwhile, under the currently valid Decree No 09, SOEs can make investments in non-core investment fields with the total investment capital of no more than their 30 percent of total investment capital. As for the banking, insurance and securities sectors, the SOEs’ capital must not be higher than 20 percent of the chartered capital of the institutions that receive capital contribution

MOF, which is drafting the decree aiming to tighten the investment in non-core business fields, said that while SOEs’ corporate governance remains limited and the competitiveness remains weak, it would be better for them to gather strength on their main business fields.

However, SOEs do not think this way. They don’t think that it is necessary to refuse to make investments in profitable enterprises.

A representative of the Vietnam Post and Telecommunication Group VNPT said that once making investment in the “sensitive fields”, the investors need to contribute the capital big enough to obtain the right to manage the businesses’ operation.

VNPT, for example, has contributed its capital to Maritime Bank which has been operating very well. However, since VNPT, a state owned economic group, has been requested to withdraw its investment capital, could not buy more stakes from the bank when the bank issued more shares to increase its chartered capital. Meanwhile, the communication giant now has to reduce the contributed capital contribution from 20 percent to 15 percent.

The concurrent chair of board of directors of the Maritime Bank remains the person assigned by VNPT. Meanwhile, if reconsidering the capital proportions, the chair will have to leave his current position, i.e that VNPT will lose its right to control the operation activities.

In fact, VNPT does not want to withdraw capital from Maritime Bank, because the investment has been bringing big profits, which are even bigger than the profits made by some subsidiaries of the group.

Tran Long An, Head of the supervision board of Petrolimex the suggested ceiling capital contribution proportion of 10 percent is too low, which is not high enough to ensure the right to manage enterprises, believing that the proportion should be raised to 15 percent.

The representative has also pointed out that in some cases, SOEs need to make investment in other enterprises, not because for profit, but for other purposes. For example, Petrolimex is contributing capital into a joint venture bank with an Indian partner, which can support the petroleum product import, while the bank is making satisfactory profits.

Meanwhile, Trinh Cong Loan from the Vietnam Cement Corporation, said that SOEs need to be given time to withdraw capital from other enterprises. The finance company of the corporation has been established with the chartered capital of 600 billion dong. “What will happen if all the partners, who contributed capital, are trying to withdraw investments at the same time?” he questioned.

Source: TBKTVN.