Roles of State-Owned Enterprises in Vietnam’s economy

The role of state economic groups in Vietnam’s socialist-oriented market economy can be highlighted through several aspects:

1. Key Drivers of the Economy and Social Welfare

State economic groups and corporations act as pivotal entities driving the economy and ensuring national social welfare. The 13th National Congress of the Communist Party emphasized the importance of “developing strong Vietnamese enterprises as the core of the national economy; maintaining major economic balances, focusing on economic security, and continuously enhancing national economic capacity.”

These groups significantly contribute to the stable and sustainable development of Vietnam’s economy by fostering growth, generating government revenue through taxes, attracting foreign investment, reducing trade deficits, curbing inflation, accelerating industrialization and modernization, and boosting national competitiveness on a global scale.

Moreover, they play a vital role in job creation, training high-quality human resources, and fostering skilled professionals. The operations and relationships among state economic groups ensure smooth and synchronized functioning of the economy. Their efforts during crises such as pandemics or natural disasters contribute to macroeconomic stability and create favorable conditions for all economic sectors to thrive.

2. Fulfilling Political and Social Missions

State economic groups are instrumental in executing the political and social objectives set by the Party and the State. Operating in key industries and strategic regions, they undertake national defense, energy security, and social policy responsibilities that other economic entities may be incapable of managing effectively. Beyond production and business activities, they ensure national security, implement social policies, and contribute to the stability and protection of the Socialist Republic of Vietnam.

3. Enhancing Economic Competitiveness

The 13th National Congress of the Party also emphasized “improving the economy’s resilience to external shocks.” Equipped with abundant labor and modern technology, state economic groups can partner with international corporations to boost the competitiveness of Vietnam’s economy. By establishing reputable brands and generating substantial state revenue, they improve living standards, ensure social equity, and contribute to a prosperous, democratic, and civilized society.

Current Performance of State-Owned Economic Groups

Under the leadership of the Party, state management, and government supervision, state-owned economic groups have fulfilled their roles as economic drivers. They have made significant contributions to Vietnam’s socio-economic development goals, especially in addressing challenges like the COVID-19 pandemic and global geopolitical tensions.

In 2022, 18 out of 19 state groups achieved a total pre-tax profit of VND 39,219 billion (173% of the plan and 117% of 2021), while total revenue reached VND 1.1 trillion (114% of the plan and 133% of 2021). Notable examples include:

• Viettel Group: Consolidated revenue of VND 163.8 trillion (6.1% growth) and pre-tax profit of VND 43.1 trillion, contributing VND 38 trillion to the state budget.
• PetroVietnam: Revenue of VND 931.2 trillion, pre-tax profit of VND 82.2 trillion, and state budget contributions of VND 170.6 trillion (9.5% of the national total).

Despite these achievements, several shortcomings persist. Some groups underperform relative to state investments, experience operational inefficiencies, or fail to meet modernization and integration requirements. Certain projects have incurred substantial losses, leading to wasted resources and public discontent. In 2021, 58 out of 673 state-owned enterprises (9%) reported losses totaling VND 15,785 billion.

Challenges and Underlying Causes

Key limitations stem from both external and internal factors. Externally, global economic volatility, rising inflation, and real estate fluctuations impact operations. Internally, weak leadership, insufficient oversight, and corruption have hampered their performance. Additionally, incomplete legal frameworks and inconsistent policies have exacerbated inefficiencies.

Recommendations for Improvement

1. Legal and Institutional Reforms
   The Party advocates for a comprehensive legal framework to resolve operational barriers, promoting innovation and sustainable development. This includes amending conflicting policies and regulations to foster economic growth and streamline enterprise operations.
2. Enhanced Oversight and Accountability
   Strengthening monitoring mechanisms is essential to detect and rectify shortcomings. Holding leaders accountable for mismanagement and implementing stricter enforcement will improve governance and reduce malpractice.
3. Capacity Building and Innovation
   Investing in technology, human resources, and partnerships will enhance operational efficiency and international competitiveness.

By addressing these issues, state economic groups can continue to play a crucial role in Vietnam’s development, ensuring a balanced, resilient, and inclusive economy.