On September 29, 2018, the Government passed Decree No.131/2018/ND-CP dated which stipulates the functions, tasks, powers, and organizational structure of the Commission for the Management of State Capital in Enterprises (“Decree 131“). Under Decree 131, the Commission for the Management of State Capital in Enterprises (“CMSC“) is a governmental agency assigned by the Government  to exercise the rights and responsibilities of the State as owner with respect to enterprises with 100% charter capital State-owned and State capital invested in joint stock companies and limited liability companies with two or more members in accordance with the law.

Accordingly, the CMSC shall be the direct representative for 19 State-owned groups and corporations such as Vietnam Petroleum Group, Vietnam Chemical Corporation, Vietnam Electricity Corporation, Vietnam Oil and Gas Corporation, MobiFone Telecommunications Company, The Vietnam Tobacco Company, Vietnam Airlines Corporation, Vietnam Railway Corporation, Vietnam Expressway Development Investment Corporation, Vietnam Rubber Industry Group, etc. Based on the 2017 financial statements, the value of State-owned capital in such State-owned enterprises (“SoEs”) and controlling companies was over VND 1 quadrillion (USD 44.24 billion), while total assets were valued at VND 2.3 quadrillion (USD 101.8 billion).

The CMSC is composed of one chairperson and no more than four vice chairpersons with nine assisting agencies, such as the Department of Agriculture, Department of Industry, Department of Energy, Department of Technology and Infrastructure, etc. The responsibilities of the CMSC aim to direct the implementation of the business plan of those corporations, and coordinate with those corporations to program  the development plan and strategy of each corporation in line with the development strategy of the industries as well as the demand of the markets. In addition, the CMSC will intensify the equitization and divestment of State capital in enterprises and the management of enterprises, publicity and transparency of business and administration activities of economic groups and corporations to improve the efficiency of the management and the use of State capital in enterprises.

In accordance with Decree 131, those 19 corporations shall transfer the right of representatives of owners of State capital in enterprises to the CMSC within 45 days after the effective date of Decree 131 and other transfer decisions.

Previously, in 2005, State Capital Investment Corporation (“SCIC“) was set up with the purpose of separating management and the SoEs by the Ministries, and the provincial-level People’s Committees, which was based on the success of similar models in many countries such as the Temasek Group of Singapore or the Khazanah of Malaysia. However, such model was ineffective due to local Ministries and authorities not wanting to transfer owned-State capital in the SoEs and corporations to the SCIC.

Recently, the establishment of “super committees” is expected to unify the status of representatives of State ownership in 19 corporations in the same way as international practices in corporate governance. The Government also affirmed that the CMSC shall not directly interfere with operations, business activities, and also the management functions of those corporations.

Generally, the CMSC’s functions shall focus on managing owned-State capital sources to ensure that no one could be the judge in one’s own case like before when the Ministries and other relevant authorities had not only issued policies in such industries but also directly managed those State-owned groups and corporations. CMSC plays an important role in supervising the operation of those groups and corporations. Hence, such enterprises would operate in an effective way and be promptly warned of risks and loss of State assets.

In addition, the CMSC shall develop and deploy 4.0 as well as E-government solutions in managing and monitoring the capital and assets of each State-owned group and corporations to strengthen transparency.


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