Hanoi (VNS/VNA) - As State-owned enterprises (SOEs) have manyfunctions in the local economy, they struggle to fulfil theirmain task of doing business, so they need solutions to improvebusiness efficiency, according to experts.

The SOEs should continue to playa role as an example in terms of productivity and efficiency and hold adominant position in the domestic economy.

According to the CentralInstitute for Economic Management (CIEM), SOEs must be real enterprises. Thatmeans they must give priority to production and business efficiency, said NguyenDinh Cung, an economic expert and former CIEM Director.

There is still debate overwhether State-owned enterprises should be considered instruments to regulatethe domestic economy as well as stabilising the macro-economy.

This has caused difficulties forthe restructuring and equitisation of SOEs, Cung said.

The efficiency of State capitalinvestment is increasing, but it is still lower than the investment efficiencyof other economic sectors. When analysing the profitability and labourefficiency ratios of the SOE sector, experts found that the sector had higherthan average ratios but they did not accurately and fully reflect theefficiency of most SOEs because the sector's total profit depends on a fewlarge SOEs operating in low-competition industries, such as mining, telecommunicationsand energy, Pham Duc Trung, head of CIEM’s Enterprise Innovation andDevelopment Department told Dau tu (Investment)newspaper.

In comparison with highlycompetitive industries, like trade, construction and manufacturing, theperformance of SOEs is lower than that of enterprises in other sectors. ManySOEs have not met requirements of financial security with high debt and theyare likely to collapse when facing a poor business environment.

"Competitive pressure hasrevealed limitations in the business of SOEs," Trung said.

The SOEs can only compete whenthey are given autonomy to do business according to permitted businessactivities. But so far, the SOEs do not have complete autonomy, Cung said.

The Government has asked theMinistry of Planning and Investment to amend and supplement Decision 58/2016/QD-TTgon criteria for classification of State enterprises and State-investedenterprises and the list of State-owned enterprises under restructure in the2016-2020 period.

The goal of the amendment is toseparate key economic sectors and public sectors from the sectors that shouldmobilise investment capital from society and determine a reasonable percentageof state ownership in enterprises to attract foreign investors and reallychange corporate governance.

The Government also requiresseparating production and supply of public products and services and productsand services for social security from production and business activities forprofit of enterprises.

According to the CIEM report, atpresent, the SOEs dominate in many sectors.

In the telecommunicationsindustry, Viettel, VNPT, MobiFone have occupied large market shares, with ratesof 51.5 percent, 28.4 percent and 12.7 percent, respectively. Viettel accountedfor 60 percent of the telecom industry revenue in 2018, with 234 trillion VND (10.2billion USD).

In the banking sector, in 2018,State-owned commercial banks accounted for 44 percent of total assets, 25 percentof total charter capital, 48 percent of the capital mobilisation market and 50 percentof the lending market in the credit organisation system.

Meanwhile, power plants belongingto State-owned corporations such as EVN, PVN and TKV accounted for about 87 percentof the electricity generation market.

In the mining industry,State-owned enterprises produced 97 percent of clean coal and directlyexploited all output of crude oil or joined with partners to refine all ofthem.

The SOE sector has moreefficiency in operations when the efficiency of State capital investment atSOEs is gradually improved. The percentage of SOEs that suffered lossesdecreased to 15.4 percent in 2017 from the average rate of 17.2 percent in theperiod of 2011-2015, Trung said.

But these figures have notconvinced experts that the sector with strong development has contributednearly 30 percent to the national GDP growth, especially when comparing the SOEsector with businesses of other sectors./.