MACROECONOMICS GROUP ASSIGNMENT t opic describe the situation of state owned enterprises in vietnam since 2010

NATIONAL ECONOMICS UNIVERSITY
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MACROECONOMICS
GROUPASSIGNMENT
Topic: Describe the situation of state-owned enterprises in Vietnam
since 2010
Group members:
Nguyễn Đại Thành Vinh
Đào Quốc Việt
Nguyễn Thúc Lý Huỳnh
Nguyễn Hoàng Hiếu
Dương Quang Tùng

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CONTENTS
INTRODUCTION.......................................................................................................................... 3
What are State-owned Enterprises?...................................................................................... 3
In Vietnam, state-owned enterprises include the following types:........................... 3
BODY PART..................................................................................................................................... 5
1. Number of employees in acting enterprises having business outcomes by
types of enterprise........................................................................................................................... 5
2. Annual average capital of acting enterprises having business outcomes by
types of enterprise........................................................................................................................... 7
3. Net turnover from the business of acting enterprises having business

outcomes by types of enterprise.............................................................................................. 10
4. Fixed asset and long-term investment of acting enterprises having business
outcomes by types of enterprise.............................................................................................. 13
5. Total compensation of employees in acting enterprises having business
outcomes by types of enterprise.............................................................................................. 15
6. Profit before taxes of acting enterprises having business outcomes by types
of enterprise.................................................................................................................................... 16
CONCLUSION............................................................................................................................. 18
REFERENCE................................................................................................................................. 19

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INTRODUCTION
What are State-owned Enterprises?
A state-owned enterprise (SOE) is a business enterprise where the government or
state has significant control through full, majority, or significant minority
ownership. In particular, state-owned enterprises are domestic companies that
have the role of being the bridge between national production and consumption,
helping distribute goods, ensuring the production process, and also aiming to
meet the needs of consumers.
(Source: Statistical Yearbook of 2020)
In Vietnam, state-owned enterprises include the following types:
(1) Enterprises with 100% of state capital operating under control of the central

or local government;
(2) Limited liability companies under the management of the central or local

government;
(3) Domestic capital joint-stock companies where the State holds more than 50%

of charter capital (to facilitate the aggregated data, if State-owned more than 50%
of owner’s equity it will be State-owned enterprises).
Source: />
Total state-owned enterprises from 2010 to 2019
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Source: />In the period 2010-2019, the development of the business sector in Vietnam has
achieved remarkable achievements in the country's economic growth and stability,
foreign trade expansion, attraction to foreign investment, poverty reduction, and
human development improvement. Those attainments are also contributed to by
state-owned enterprises in Vietnam. According to the table, the number of SOEs
in Vietnam decreased rapidly from 2010 to 2019 (from 3281 to 2109), about a
1.5-times decrease. the state-owned enterprises had a significant reduction in the
number of enterprises, but the enterprise sector was still attracting considerable
capital for production and business with 9.2 million billion VND, a rise of 51%;
the FDI enterprises attracted 6.5 million billion VND, went up 88.1%. (Source:
Statistical Yearbook of 2020)
This paper tries to analyze key characteristics of Vietnam's state-owned
enterprises to show the important role of state-owned enterprises in Vietnam:
+ Number of employees
+ Annual average capital
+ Net turnover
+ Value of fixed asset and long-term investment
+ Total compensation of employees

+ Profit before taxes

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BODY PART
Number of employees in acting enterprises having business outcomes
by types of enterprise
1.

In the periods 2010-2014, the laborers of the state-owned enterprise sector in the
period reduced 2.4% per year on average because of its restructure and
equitization. The number of laborers working in the state-owned enterprises as of
31/12/2014 accounted for the lowest rate with 12.7%, ranked behind the nonstate-owned sector with 58.9% and FDI sector with 28.4%. The state-owned
enterprises had the highest number of average employees per enterprise with 504
employees, followed by the FDI sector with 312 employees.

(Source: 2015 Statistical Yearbook)
The chart below shows that the number of employees in central state-owned firms
had decreased drastically, while the number of employees in local state-owned
enterprises had fluctuated.

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(Source: 2015 Statistical Yearbook)

In the period 2015-2019, the laborers of the state-owned enterprise sector in the
period reduced by around 5.5% per year. The number of laborers working in the
state-owned enterprises as of 31/12/2019 still accounted for the lowest rate with
7.31%, ranked behind the non-state-owned sector with 59.90% and FDI sector
with 32.79%.

(Source: 2020 Statistical Yearbook)

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The chart below shows that the number of employees in both 100% state-owned
capital and over 50% state-owned capital firms had gradually declined in the
period 2015-2019.

(Source: 2020 Statistical Yearbook)

Annual average capital of acting enterprises having business outcomes
by types of enterprise
2.

Formula:
The
annual
average capital

=

Capital
beginning
period

at
of

the
the

+

Capital at the end
of the period

2

The scale of average capital in the period was increased in all 3 types of
ownership, especially in the state-owned enterprises. The average capital scale
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of the state-owned enterprises was increased 1.8 times from 1.22 billion dongs
in 2010 to 2.16 billion dongs in 2014 with an average growth rate of 15.4% per
year. Its scale of capital was the highest, 76 times higher than that of non-stateowned enterprises and 6 times higher than that of FDI enterprises.

(Source: 2010-2014 Business Results of Vietnamese Enterprises)
The chart below shows that the annual average capital of state-owned enterprises

had increased dramatically in the period 2010-2014, from 3701.8 trillion VND in
2010 to 6250.8 trillion VND in 2014. While the annual average capital of central
state-owned enterprises had risen drastically, local state-owned enterprises’
received a steady rise.

(Source: 2015 Statistical Yearbook)
In the period 2015-2019, although the state-owned enterprises had a
significant reduction in the number of enterprises, the enterprise sector was
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still attracting considerable capital for production and business with 9.2
million billion VND, a rise of 51%.`
The chart below shows that the annual average capital of state-owned enterprises
had a significant increase in the period 2015-2019, from 6944.9 trillion VND in
2015 to 9357.8 trillion VND in 2019. While the annual average capital of over
50% of state-owned capital enterprises had surged rapidly, 100% of state-owned
capital enterprises peaked in the first three years, then steadily declined in the
next two years.

(Source: 2020 Statistical Yearbook)

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Net turnover from the business of acting enterprises having business

outcomes by types of enterprise
3.

(Source: 2010-2014 Business Results of Vietnamese Enterprises)
As you can see from the chart, in the period 2010-2014, the total net revenue of
enterprises increased nearly 1.8 times from 7.8 million billion dongs in 2010 to
13.8 million billion dongs in 2014 and the average increase was 15.1% per year.
The state-owned enterprises had the growth rate of net revenue with 9.1% per
year.

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(Source: 2015 Statistical Yearbook)
Although the state-owned enterprises had the lowest growth rate of net revenue,
the number of enterprises were reduced leading to an increase of average revenue
per one enterprise of 11% per year. This sector also had the highest average
revenue per one enterprise with more than 1 trillion dong.
The state-owned enterprises had the highest growth rate of benefit before taxes
per one enterprise with 14.7% per year, increasing from 35.1 billion dongs in
2010 to 60.7 billion dongs in 2014.

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(Source: 2020 Statistical Yearbook)

The chart shows the net turnover of state-owned enterprises in 2015-2019. In this
period, the net revenue increased rapidly. In 2015, the net revenue from the stateowned enterprises is about 2,6 trillion VND, though, in 2019, the net revenue
from the state-owned enterprises reached 3.6 trillion VND, an upturn of 27%
(enterprises with 100% state-owned capital increased by 7,4%)
However, it is widely accepted that the performance of SOEs regarding
profitability is highly likely to be lower than in the private sector due to their
missions for nonprofitable activities, except for several specific industries, in Viet
Nam where many SOEs are doing in profitable industries such as banking, food,
and beverage, or carriage service (General Statistics Office 2018). Therefore, poor
performance in SOEs is not always rational or understandable.

Fixed asset and long-term investment of acting enterprises having
business outcomes by types of enterprise
4.

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(Source: Statistical Yearbook 2015)
The chart demonstrates the value of the fixed asset and long-term investment of
central and local state enterprises from 2010 to 2014. It is obvious that the
percentage of central state enterprises has an upward trend during this period,
while the lowest value of the fixed and long-term investment in 2010 was about
1601,4 trillion dongs, the highest number was almost 3109,8 trillion dongs in
2014. Besides, in terms of local state companies, this figure also has an upward
pattern over the period. The value of the fixed asset and long-term investment in
2010 was just 157,6 trillion dongs, after 4 years, in 2014, it increased moderately
to 248,8 trillion dongs.

(Source: 2020 Statistical Yearbook)
The graph illustrates the value of the fixed asset and long-term investment of
100% state-owned capital and over 50% state-owned capital enterprises between
2015 and 2019. Overall, the figure for 100% state-owned capital companies has a
downward trend during the period. After reaching 3173,4 trillion dongs in 2015, it
decreased slowly to 2321,4 in the same amount of money in 2019. In terms of the
number of over 50% state-owned capital enterprises, from 2015 to 2017, this data
has risen from 1426,3 in 2015 to 1977,3 in 2017. After that, it decreased
significantly to just 985,3 trillion dongs in 2019.

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Total compensation of employees in acting enterprises having business
outcomes by types of enterprise
5.

(Source: Statistical Yearbook 2015)
Thechartshowsthetotalcompensationofemployeesinlocalandcentralstate
enterprisesfrom 2010to2014.Overal,thenumberoflocalstatecompanies
experiencedanupwardtrendfrom 2010to2013withthehighestfigurein2013
being30249biliondongsafteritdecreasedslowlyto28613biliondongsin
2014.Besides,forcentralstateenterprises,between2010and2012,thedata
increasedby21723biliondongs.Afterthat,thisdataclimbedstronglyto

142857biliondongsin2014.

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The graph depicts the total compensation of employees in 100% state-owned
capital and over 50% state-owned capital enterprises. The number of 100% stateowned capital and over 50% state-owned capital has an upward pattern from
2015 to 2019. In terms of 100% state-owned capital, after 5 years, the figure for
compensation of employees rose to 110,2 trillion dongs in 2019. Besides, from
2015 to 2017, the data of over 50% of state-owned capital has increased slowly
by 4,8 trillion dongs. After that, between 2018 and 2019, the number of
compensation of employees increased to 79,2 trillion dongs.

Profit before taxes of acting enterprises having business outcomes by
types of enterprise
6.

From 2010 to 2014

(Source: 2015 Statistical Yearbook)

%
owned
enterprises to
total

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From 2010 to 2013, the amount of pre-tax profit made by SOEs increased
dramatically, accounting for roughly 48 % of the profit before taxes of acting
firms with business outcomes by categories of enterprises in the entire country in
2012. However, due to a variety of factors, it began to decline the next year. In
2014, the figure was nearly the same as it had been in 2010.

From 2015 to 2019
In 2018, profit before taxes of acting enterprises having business outcomes by
types of enterprise declined the greatest, by 6.17 %, compared to 2015. However,
compared to the previous year, it has climbed by 0.93 % in 2019.

Source: />When looking at the graph above, we can see how enterprises with more than
50% of the state's investment capital have changed over time; in 2015, these
enterprises produced higher profits than those with 100% state investment,
accounting for 6.82 % of the country's total pre-tax profit. In the following years,
however, the trend was reversed, with the difference between the two categories
of businesses amounting to around 3.7 % of the country's overall
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profit before tax. We can see from the data table provided by GSO that SOEs
continue to contribute a significant amount to the country's profit before taxes of
acting enterprises. Even though this number is around 9.15 percent lower in 2019
than it was in 2010.

CONCLUSION
For several reasons, the number of state-owned enterprises is slowly declining.

Otherwise, SOEs are preparing for reformation, which will have greater impacts
on both the state and the enterprises themselves. However, for the reforming as
well as the equitization process to happen, it will be very challenging for the
entities. One of the most outstanding ones is the limitations in awareness and
enforcement of administrative discipline from the governing bodies and
enterprises. They maintain the ownership of the enterprise in parallel with the
existence of the fear of losing power.

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REFERENCE
- Business results of Vietnamese enterprises in the period 2010 -2014 (2016);

/>- Explanation of terminology, content, and methodology of some statistical

indicators on enterprises (2019);
/>- Number of acting enterprises having business outcomes as of annual 31st

December by types of the enterprise; />pxid=E0506&theme=Enterprise
- Statistical Yearbook (2015); />fbclid=IwAR34jMfsF3NQ6bxeF2u1i-Lh8xugJKYKAY0J5sFifbR6RyMl0u2IGGiSiS4
- Statistical yearbook (2019); />
content/uploads/2020/09/Nien-giam-thong-ke-day-du-2019.pdf
- Statistical Yearbook (2020); />
content/uploads/2021/07/Sach-NGTK-2020Ban-quyen.pdf
- Statistical summary book of Viet Nam (2020); />
content/uploads/2021/07/Nien-giam-Tom-Tat-2020Ban-quyen.pdf

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