Tăng cường minh bạch thông tin tại các doanh nghiệp nhà nước ở việt nam tt tiếng anh

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
-----------------------

SUMMARY OF PHD THESIS

ENHANCING INFORMATION TRANSPARENCY
OF STATE-OWNED ENTERPRISES IN VIETNAM

Field: Business
Major: Business Administration
Code: 62.34.01.02 (New code: 9340101)

NGUYEN THI HAI VAN

Ha Noi - 2019


The thesis is completed in Foreign Trade University

Supervisor: Assoc.Prof.Dr. Le Thi Thu Thuy

Reviewer 1:
Reviewer 2:
Reviewer 3:

The thesis will be defended in front of the University level Council
of Thesis Assessment at
at ….. hour …..date…..month…..year…..

The thesis can be found at the National Library and Library of

Foreign Trade University


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LIST OF ARTICLES

1. Nguyen Thi Hai Van (2018), Enhancing information transparency
of state-owned enterprises in Vietnam, Review of Finance No2 (691)
October 2018, pages 42 – 45.
2. Nguyen Thi Hai Van (2018), Enhancing the roles of Government in
order to ensure information transparency of state-owned enterprises in
Vietnam, Asia – Pacific Economic Review No527 (October 2018),
pages 62 – 64.


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TABLE OF CONTENTS
INTRODUCTION ........................................................................................................................ 2
CHAPTER 1. LITERATURE REIEW OF INFORMATION TRANSPARENCY OF STATEOWNED ENTERPRISES ............................................................................................................ 3
1.1 General theory of information transparency of enterprises .................................................... 3
1.2. Theories of information transparency: .................................................................................. 5
1.3. Overview of State-owned enterprises and information transparency of enterprises ............ 5
1.4. Experience of information transparency of SOEs in some countries .................................... 8
CHAPTER 2 ANALYSIS OF INFORMATION TRANSPARENCY OF SOES IN VIETNAM... 9
2.1. Overview of SOEs in Vietnam .............................................................................................. 9
2.2. Status of regulations on information transparency at SOEs ................................................ 14
2.3. Status of information transparency of SOE in Vietnam ...................................................... 14
2.4. Analysis of financial factors affecting information transparency in SOEs ......................... 17

2.5. Assessment of status of information transparency at SOEs ................................................ 19
CHAPTER 3 SOLUTIONS FOR ENHANCING INFORMATION TRANSPARENCY OF SOES
IN VIETNAM ............................................................................................................................. 20
3.1. Orientation of information transparency of SOEs in Vietnam ............................................ 20
3.2. Solutions enhancing information transparency of SOEs ..................................................... 20
3.3. Proposals for State ownership representative agencies ....................................................... 21
3.4. Proposals for State management agencies and other related parties ................................... 22
CONCLUSION........................................................................................................................... 23


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INTRODUCTION
1. Rationale
A fundamental problem in corporate governance is the generation of information
asymmetry in relation between owners and business managers. The owner - the trustee - assigns
his or her investment to the manager - the representative - to run the day-to-day business.
However, the representative often has an information advantage over the trustee and tends to
exploit this to benefit himself instead of the investor.
State-owned enterprises (SOEs) in the broadest sense are also the type of public
corporation with ownership belonging to the entire population. However, people's ownership
rights are entrusted to the Government for enforcement. Therefore, strengthening publicity and
transparency will lend a helping hand for state agencies as well as the whole society to monitor
the activities of SOEs, avoid frauds and inefficient use, loss and waste of national resources;
thereby putting pressure on these enterprises to operate more efficiently and at the same time,
creating an initial database for state agencies to develop timely and effective governance policies.
Nonetheless, so far, many Vietnamese state-owned enterprises have not strictly complied
with the regulations on publication and transparency of the issued information. The situation of
SOEs without information disclosure, slow, incomplete disclosure is quite common. The question
is how to impulse the equitization process of SOEs, accelerate the enterprises restructuring
process towards better operational efficiency, more sustainably developing so as to be worthy of

the economic pillar. Part of the answer lies in enhancing information transparency of SOEs.
Meanwhile, in Vietnam, research on information transparency of SOEs is quite limited.
Stemming from that situation, the author selected the topic "Enhancing information transparency
of state-owned enterprises in Vietnam" to implement the PhD thesis.
2. Purpose, thesis question and research duty
Thesis is based on reasoning of information transparency of SOEs, evaluating the situation
of information transparency of SOEs, in order to propose solutions to enhance information
transparency of SOEs.
To achieve objectives above, there are three thesis questions as follows:
1)
How was the situation of information transparency of SOEs in Vietnam? Is there any
difference of information transparency between unlisted SOEs and listed SOEs in Vietnam?
2) Which factors impacts on information transparency of SOEs and to which degree?
3) How to enhance information transparency of SOEs in Vietnam in the coming time?
3. Research object:
Object of the study are theoretical and practical issues on information transparency of
SOEs in Vietnam.
4. Research scope:
Content scope: The thesis studies and evaluates the status of information transparency and
factors affecting information transparency of SOEs in Vietnam (enterprises in which the State
holds 50% of capital charter and over). When assessing the factors affecting information
transparency of SOEs in Vietnam, due to limited access to information of macro and other micro
factors, the thesis only focuses on Analysis of the financial factors of enterprises influencing the
information transparency of the above enterprises.
Venue scope: The thesis does not go into the information transparency of a specific SOE
but only evaluate the overall information transparency of SOEs on the basis of surveyed
information which is published by SOEs via channels such as website of enterprises, information
portal about SOEs of Ministry of Planning and Investment, information portal of state-owned
shareholder representative agencies and other media.
According to information transparency of SOE in a number of countries, the thesis

selected two countries neighboring to Vietnam that have advance in the implementation of
information transparency of SOEs such as South Korea and Malaysia and lessons applicable to
Vietnam.
Time scope:


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- Regarding the performance of SOEs, the thesis uses data from 2010.
- Regarding to survey of information transparency, the author mainly surveyed in the last 2
years as 2016 and 2017 to provide the most updated assessment of information transparency of
SOEs in Vietnam
5. Research methodology:
Research methodology includes two main steps: Overall research by qualitative method
and verification research by quantitative method.
Overall research by qualitative method:
The thesis examines legal documents, regulation and instructions of information
transparency at enterprises, collecting secondary data from reports, research results of
information transparency of SOEs in the world and Vietnam.
Verification research by quantitative method:
The study collects secondary data of financial information of SOEs to assess level of
impact of those factors on information transparency of SOEs through running multiple regression
model on STATA.
6. New contribution of the study
Besides inheriting previous studies, the thesis had new contribution as follows:
- As one of the first thesis to synthesize theoretical and practical issues on information
transparency of SOEs, including definition, characteristics, content, evaluation criteria and factors
influencing transparent information at SOEs.
- The study analyzes and evaluates the status of information transparency of SOEs in
Vietnam in the past, thenceforth, outlines the shortcomings and causes.
- The study conducts quantitative analysis of financial factors affecting information

transparency of unlisted and listed SOEs and draws conclusions that large size SOEs and have
good business results tend to be more transparent.
- The thesis proposes orientations and solutions to enhance information transparency of
SOEs in Vietnam, including solutions for SOEs and recommendations for State shareholder
representative agencies, State agencies and stakeholders.
CHAPTER 1. LITERATURE REIEW OF INFORMATION TRANSPARENCY OF
STATE-OWNED ENTERPRISES
1.1 General theory of information transparency of enterprises
1.1.1. Definitions:
1.1.1.1. Information:
Information is an abstract definition and has many different approaches. According to
Vietnam's Law on Information Access No. 104/2016 / QH13, information is data that is contained
in available documents, documents and documents are available, exists in the form of written,
printed, electronic versions, pictures, drawings, tapes, records, audio recordings or other forms
created by State agencies.
1.1.1.2. Enterprise information
Enterprise information is understood as a collection of data, news, data reflecting the
situation of enterprises operation, related to enterprises, enabling users to make decisions to
achieve desired goals.
1.1.1.3. Information transparency:
Information transparency in the market is understood as that economic entities (people,
businesses or governments) can update market information in a complete, reliable, timely and
available way and access easily (Vishwanath and Kaufmann, 1999). In a report published by WB
on information transparency in financial sector, Tara Vishwanath and Daniel Kaufman (1999)
introduced the concept of information transparency as: "Information transparency describes the
flow of political, social, and economic information published reliably, timely. In contrast, lack of


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information transparency is the intention that someone do not want information to be

accessed or falsify information or not ensure that the provided information is appropriate and
qualified”.
From an enterprise perspective, Busman et al (2004) introduced the concept of financial
information transparency as the availability of specific enterprise information for investors and
outside shareholders. From above analysis, the author understands that: "Information
transparency is the information disclosed appropriately, reliably, promptly and in a way
that the public can access."
Stemming from the above understanding of transparency, enhancing information
transparency is understood as measures to increase the appropriateness, reliability, timeliness and
accessibility of published information. of the business. The measures here include activities
related to corporate governance, building information systems within the enterprise or any
activity that increases the relevance, reliability, timeliness and accessibility of published
information of the business.
1.1.2. Categorizing enterprise information
1.1.2.1. As content of information:
i. Financial information:
Financial information is information related to cash flow, business results and financial
status of enterprises in a particular period. Financial information can be historical or predictive,
often in the form of monetary unit (Nivra, 2008)
ii. Non- financial information:
Non- financial information is predictive information about management plans,
opportunities, risks, factors that enhance ability that create values in the long term for enterprises.
Non- financial information includes transactions with related parties, non-commercial objectives
and policy commitment, ownership structure and governance structure, risk exposure, risk
management (WB 2014)
1.2.2.2. As the mandatory nature of the information
i. Mandatory information
Mandatory information is the one required by law to be published according to content and
schedule. Content of mandatory disclosure information includes financial information,
information about the Board of Directors and the Board of Management, transactions with related

parties ... shown in annual reports, interim reports , prospectus.
ii. Voluntary information
Voluntary information is optional information published by the law that enterprises
voluntarily announce for the sake of prestige, corporate image, relations with investors, to
supplement the insufficience of required information to satisfy users’ needs. Voluntary
information content is much diversified.
1.1.3. The role of information transparency in the economy
1.1.3.1. To enterprises
i. Information transparency helps increase access to external financial resources, thereby
reducing cost of capital use and increase asset value for businesses. ii. Information transparency
contributes to increase the efficiency of enterprise operation iii. Information transparency will
reduce the impact of crises on enterprises
1.1.3.2. To the stakeholders
Information transparency will help shareholders and investors understand the operational
efficiency of enterprises, assess management standard of the Board of Directors and the Board of
Management; thereby improving the ability to make reasonable economic decisions to reduce
risks and protect their rights.


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Information transparency also helps creditors, suppliers, customers and employees
evaluate their position, adapt to changes and shape their relationships with businesses.
1.1.3.3. To state agencies and the national economy
Information transparency helps state agencies perform the function of managing and
monitoring the market more easily and effectively; promptly have appropriate solutions to limit
and prevent misbehavior. Information transparency contributes to increasing asset value and
improving business performance, ensuring efficient use of national resources; thereby promoting
growth and development of the economy. Information transparency also contributes to
minimizing the negative impacts of world economic crises on the national economy.
1.2. Theories of information transparency:

1.2.1. Theory of asymmetry:
Asymmetry is the state when parties participating in transactions with different level
information; one party with more information, more accurate information and easy or earlier
access than the other, thenceforward, takes advantage of acquired information. The situation
when information is not sufficient, promptly, accurate, reliable and when there is an asymmetric
access of people participating in financial market is a way of non-transparent information.
Asymmetric information will lead to two most common consequences that is reverse
selection and moral hazard. This will distort decisions of economic subjects to enter the market,
may even lead to market failures. Since then, Michael Spence (1973) proposed the signaling
hypotheses and Joseph Stiglitz (1975) introduced a screening mechanism to reduce this
asymmetric information.
1.2.2. Theory of agency
According to research by Michael C. Jensen and William H. Meckling in the “Theory of
the firm: the Managerial behavior, agency costs and ownership structure” (1976), the theory of
owner - representative (called as agency theory) define a proxy relationship as a contract whereby
one or more individuals (principal) commit to another individual (agents) on their behalf to do
certain jobs including delegating economic decision-making to a representative. Therefore, there
is a conflict about the goals and interests between owners and managers, the status of asymmetric
information between owners (less information) and managers (more information).
Agency theory is often used to explain information transparency or increase voluntary
interpretation of enterprise executives (Robert Bushman and Smith, 2001). Behavior of the agent
(manager) in the issue of increasing the level of disclosure or transparency of information when
considering between benefits and costs of information disclosure.
1.2.3. Relevance theory
According to Relevance theory, financial information is established based on assumptions:
there is always an asymmetric information between the financial statements makers and the users;
the demand of users for accounting information should be determined through factual evidence;
satisfying users’ information is done through parties with interests related to the financial
situation of the enterprise; the relevance of information needs assessing in the benefit-cost
correlation. Information transparency, especially financial information, is built on the basis of

relevance of financial information for people who use information of businesses.
1.3. Overview of State-owned enterprises and information transparency of enterprises
1.3.1. Definition of State-owned enterprises:
In the world, there are many ways to define state-owned enterprises. According to the
World Bank, SOEs are economic entities owned or controlled by the State that generate income
majorly from the provision of goods and services (WB, 1995). According to OECD (2005),
"state-owned enterprises are used to refer to enterprises where the state has whole, majority or
important minority control."


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In Vietnam, the Enterprise Law 2005 regulates that SOEs are enterprises in which the
State owns more than 50% of charter capital (Article 4, clause 22). The Enterprise Law issued in
2014 defines SOEs as 100% state-owned enterprises (Article 4, Clause 8). However, many
regulations about SOEs as defined in the Enterprise Law 2014 still apply to enterprises owned by
the State with less than 100% of charter capital, including regulations on information disclosure
(enterprise that the state holds less than 100% of charter capital shall disclose information
according to Articles 108 and 109 - Enterprise Law 2014, applicable to state enterprises). On the
other hand, the policy of reducing the number of SOEs with 100% state-owned capital, accelerating
the equitization of SOEs, lead to the fact that the number of enterprises with major owned by State
are still large. This is an important object to study to ensure the sustainable and healthy
development of these businesses as well as the capital of the people in which the State is the
ownership representative. In order to comply with international standards as well as the OECD
concept, the thesis understands that state-owned enterprises are enterprises that the state
enforces ownership or controls through owning 50% above of the shares that have voting
rights and over; works to implement commercial goals or public policy objectives or both.
1.3.2. Capital management model in SOEs
The capital management model in SOEs is quite diversified in different countries.
According to OECD (2017), there are main models for managing capital in SOEs as follows:
- Decentralized model: State capital is managed by specialized ministries and regulations

corresponding to each sector. The countries that maintain this model are Malaysia and Pakistan.
- The decentralized model has a coordination agency: According to this model, there is a
consensus in the management through that the Government establishes a centralized agency to
build and control the implementation of corporate governance and information transparency.
- The model concentrates on the form of a state-owned company: Bhutan and Kazakhstan
maintain this model and allow the establishment of Druk Holding and Investments (Bhutan) and
SamrukKazyna (Kazakhstan) to manage State capital at enterprises.
- Centralized model under a State agency or Ministry: Typically such as Korea and
Thailand, these countries set up a specialized agency to implement ownership rights in SOEs.
1.3.3. Characteristics of information transparency of state-owned enterprises
Information transparency of SOEs and other types of businesses in the economy has
something in common. Yet, derived from SOEs' specific characteristics, information transparency
of SOEs also has its own characteristics.
1.3.3.1. SOEs have quite abstract owners who are the State, or actually the whole people. Many
State parties can affect SOEs as follows:

Figure 1.1. SOEs-related management parties
Source: OECD (2005)


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Therefore, the responsibilities and motives involved in disclosing information will be more
limited than other businesses.
1.3.3.2. Representatives in SOEs are also more complex than private enterprises.
Representative costs related to information transparency are also higher in SOEs.
1.3.3.3. Managing conflicting objectives
Governance of conflicting goals (profit and non-profit goals) is also a challenge in
corporate governance of SOEs, which makes corporate governance SOEs and information
transparency is much more complicated.
1.3.3.4. In many countries, SOEs cannot change the Board of Directors by acquiring or voting

proxy contest and most are not bankrupt.
This reduces the motivation of board members and managers in information transparency
(the issue of benefits and costs of information disclosure) and non-bankruptcy also creates a soft
budget constraint in information transparency.
1.3.4. Content of information transparency of SOEs
1.3.4.1. Mandatory information transparency:
Mandatory information is information that law requires enterprises to disclose. Mandatory
information transparency often includes:
- Disclosing periodic information of enterprises
- Disclosing abnormal information
- Disclosing information as requested’
- Disclosing information relating
1.3.4.2. Voluntary information transparency
Disclosing information voluntarily is based on economic theory “reasonable behavior of
economists”, when managers consider the relation between benefit and cost of disclosing, if
voluntary disclosing has benefit over cost, they will conduct disclosing, or else they will not
conduct voluntarily (Yu Tian, 2009).
OECD Corporate Governance Standards (2015) recommend that state-owned enterprises
should disclose the following information:
i. Business objectives and results achieved (for enterprises owned entirely by the state, this
content must include all tasks assigned by the state-owned agency)
ii. Financial and operational results of the enterprise, including costs and fund for public
policy objectives (if any)
iii. Material risks can be anticipated and risk management
iv. All financial support, including guarantees received from the state; commitments made
on behalf of the enterprise, including contractual commitments and obligations arising from
public-private partnership projects
v. Issues related to employees and other stakeholders
1.3.5. Criteria for evaluating information transparency of state-owned enterprises
1.3.5.1. Relevance

According to Céline Michailesco (2010), relevance means that the subject disclosing
information must always pay attention to the needs of users to provide the most appropriate
information. Moreover, appropriate information is information that can make a difference in
users’ decision making. In order to meet that, the information must have a predictive value or a
valid value or both.
1.3.5.2. Reliability
Reliability is guaranteed when quality information is verifiable; complying with
accounting standards as well as relevant laws and regulations, financial information must be
audited by reputable independent organizations. According to Céline Michailesco (2010),


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reliability can be measured through prestige, brand, scale, market share and years of
experience of an independent auditing company.
1.3.5.3. Timeliness
Timeliness means that information must be available to the users' decision making before
it loses its value and ability to influence those decisions. Obsolete the information is, the lower
usefulness is. Therefore, information must be updated and published regularly.
1.3.5.4. Accessibility
Accessibility is an important criterion because even when information is submitted to regulatory
agencies on time, the usefulness of information is limited if there is only a limited number of
users access to this information
1.3.5.5. Responsibilities of the disclosure party
The information disclosure party is responsible for complying with the laws on
information disclosure, enhancing the application of recommended international standards;
accountable for published-information explanation. Information disclosure party should have a
specialized department with sufficient human, material and financial resources to ensure an
effective and transparent information disclosure system.
1.3.6. Factors influencing information transparency of SOEs
In order to ensure transparency of information, there must be a combination of factors,

including: appropriate legal environment; the role of the State; activities of independent auditing;
governance capacity of SOEs.
1.3.6.1. Factors outside SOEs
i. Legal environment
The legal framework related to information disclosure and transparency includes legal documents
governing enterprise activities; accounting standards, auditing standards; a set of corporate
governance rules in general; obligations for information disclosure of enterprises in particular;
guide documents about corporate governance practices, disclosure and transparency of enterprise
information.
ii. The role of the State
The State establishes the legal framework, regulations and policies on information disclosure and
transparency in enterprises. At the same time, the State monitors and promotes law compliance,
standards and regulations on information disclosure and transparency; encouragement for good
application of practices, compliance with regulations on disclosure and transparency of enterprise
information within the scope of their responsibilities.
iii. Independent audit
1.3.6.2. Factors inside State enterprises
i. Management capacity of enterprises includes: Scale, structure of the Board of Directors
/ Board of members; Responsibilities of the Members' Council / Board of Directors; Internal
control environment; The level of equity concentration.
ii. Financial characteristics of State-owned enterprises include: Enterprise size; Financial
leverage; Business efficiency; Pledged assets; Effective use of assets.
1.4. Experience of information transparency of SOEs in some countries
- Enforce a system of legal regulations and detailed and complete practices guide on
information disclosure and transparency of SOEs.
In Korea, the legal framework for publicity and information transparency of SOEs was
completed in 2007 after the Inter-ministerial Steering Committee was established. This
framework is designed to improve SOEs’ performance. All public organizations, including SOEs,
must disclose governance information in accordance with the Law on Public Organization
Management. SOEs (as well as other public organizations) have duty to publicize their data

according to 34 standardized contents of financial and non-financial information (initially there
are only 20 content to be public).


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Malaysia's GLCs and GLICs have a much-diversified structure, and must comply
with information disclosure and transparency regulations in the following documents: Listing
Requirements; Companies Act 1965 and Legal Agency Act 1980 or Law 240. Each law contains
guidelines for reporting and does not have any exemption in reporting of SOEs in Malaysia.
- Establishing an open information system for public organizations on the internet
platform allows people to access information easily and smoothly.
In an effort to reform the overall SOE and to facilitate public access to information, an
open internet-based information system of public organizations was created in 2005 (called as
ALIO, refer to www.alio.go.kr). This system provides information of all public organizations in
Korea, including SOEs.
- Sanctioning mechanism when SOEs fail to comply with the law on information disclosure
and transparency.
Under the Law on Public Organization Management, SOEs must disclose standardized
information on the ALIO website and have penalty policy if the information is not made public.
Since 2009, the Korean Government has asked the Ministry of Finance and Strategy to inspect
and verify the accuracy of information published by SOEs, and has the authority to impose fines
regarding to dishonest cases.
- Enhancing the role and responsibility of state management agencies in public
information disclosure
For the public, although the Malaysian government does not provide an annual synthesis
report on the performance and results of all SOEs, the Ministry of Finance is responsible for
making an annual report on the financial situation of a number of SOEs (GLCs) that play an
important economic role. The content of published information includes general payments,
operating costs, development items (investments) and balance sheets...
Companies Commission of Malaysia - CCM under the Ministry of Domestic Trade,

Cooperatives and Consumer Malaysia, is the agency that performs the function of state management
on business registration. The Companies Commission of Malaysia provides services on business
establishment and registration as well as information disclosure of companies. One of the important
functions and tasks of CCM is to strengthen and promote the provision of enterprise information in
accordance with the law; to build and develop databases, through which any information about
business received by the Commission can be analyzed and provided to the public;
In addition, the investment public can access information about SOEs through the website
of the GLCs Conversion Program or Government Investment Fund Khazanah National. Annually,
the Government Investment Fund Khazanah National of Malaysia announces the investment
portfolio, investment strategy, information on the financial efficiency of the portfolio, social
responsibility initiatives...
- Applying a specialized agency model to act as the representative in SOEs.
Korea has established an Inter-ministerial Committee and Public Organization
Management for better coordination of SOE ownership. An Inter-ministerial Steering Committee
(CPIM) (replacing the same supervisory agencies) supervises the ownership function of SOEs
since 2007.
In Malaysia, Khazanah is Malaysia's state-capital investment organization with a structure
consisting of a parent company (Khazanah Nasional Berhad), subsidiaries and companies with
shares and capital contributed by the parent company. This model also supports more transparent
information implementation in SOEs.
CHAPTER 2 ANALYSIS OF INFORMATION TRANSPARENCY OF SOES IN
VIETNAM
2.1. Overview of SOEs in Vietnam
2.1.1. Role of SOEs in Vietnam
SOEs in Vietnam have been established with the development of the state economic
component for 50 years. Until now, SOEs still play an important role in national economy and
Congress XI claims main role of State economy.
2.1.2. Innovation progress of SOEs

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According to Trần Du Lịch, innovation progress can be divided into 4 stages:
1. 1991-1993 stage: reforming and restructuring production and business of the state
economic sector; overcome the phenomenon of establishing a state-owned enterprise
extensively in industries and localities during the period 1986-1990
2. 1994-1997 stage: establishing SOEs force into State corporation - play a key role of SOEs;
at the same time rearranging, diversifying ownership of small size SOEs; eliminating
gradually superior management regime of SOEs.
3. 1998-2001 stage: Continuing to enhance and rearrange SOEs following the spirit of the
Central Resolution 3 (Term VIII), the highlight of this period is the strong implementation
of the process of SOE privatization...
4. 2001-now stage: organizing a model of state financial investment corporation, continuing
to equitize SOEs and the highlight is the policy of piloting state-owned economic groups
(from 2005 to 2010).
2.1.3. Numbers of SOEs
With the concept of SOEs in chapter 1 of the thesis, according to the author, SOEs in
Vietnam can be classified into the following main groups:
* State-owned enterprises with 100% capital of the State (including economic groups,
corporations, and limited liability companies) or enterprises with State ownership.
* SOEs have 50% or more of the State's contributed capital and less than 100%, including
two types:
- Enterprises with state capital are officially listed on the stock market (listed joint stock
company)
- Enterprises with unlisted State capital (limited liability companies with 2 or more
members, unlisted corporation)
Along with above understanding, the General Statistics Office has summarized current
numbers of SOEs in Vietnam as follows:
Table 2.1. Total numbers of SOEs in Vietnam
Unit: Enterprises
Quantities

2010

2014

2015

2016

2017

- SOEs with

3281

3048

2835

2662

2486

+ 100% state -owned

1801

1470

1315

1276
1204

+ more than 50% state-owned

1502

- Non-state enterprise, including
+ Private companies

1520

1386

1282
268831 388232 427710 488395 541753
48007

49222

47741

48409

45495

220824 339010 379969 439986 496258

+ Others

Ennterprise
capital
Total

1578

with

foreign

investment

Proportion of SÓE/total enterprises

7248

11046

11940

14002

16178
279360 402326 442485 505059 560417
1.2%

0.8%

0.6%

0.5%

0.4%

Source: General Statistics Office 2017
In the Government Report (2017), by the end of 2016, there were 583 SOEs owned by the
State with 100% charter capital (including 7 economic groups, 67 State-owned corporations, 17
one-member limited liability companies that operate according to the model of parent company subsidiary company, 492 independent enterprises of ministries and localities; 273 enterprises
have shares and contributed capital of the State (including 34 corporations, holding companies
and 239 independent joint stock companies).


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The number of enterprises with shares and contributed capital of the State fluctuates
due to the following reasons: (1) some SOEs were not 100% owned the State, and were
officially transferred into a joint stock company in 2015; (2) some joint stock companies transfer
representatives right of the state capital owner to the State Capital Investment Corporation
(SCIC); (3) The State has completed the divestment of all state capital in a number of joint stock
enterprises according to the approved state capital divestment plan.
For equitized SOEs listed on the Vietnamese stock market with 50% or more of the state
capital ownership, the author made statistics in 2017 as follows
Table 2.2. Numbers of listed SOEs in 2010-2018
2010
2011
2012
2013 2014
2015
2016 2017 2018
157
Total

69
89
125
131
133
158
168
180
SOEs listed
78
on HOSE
26
47
54
55
57
76
75
80
SOEs listed
79
on HNX
43
42
71
76
76
82
93
100

Source: Stockplus
Thus, over time, the number of listed SOEs is increasing. The number of listed SOEs in
2017 is nearly three times the number of enterprises in 2010.
2.1.4. Numbers of employees in SOEs:
Until now, SOEs is still a group of enterprises supplying jobs for labor force most.
Table 2.3: Average number of employees working at SOEs
Unit: thousand persons
2010

2014

2015 2016

2017

SOEs

516

504

484

483

483

-100% state-owned enterprises

734

694

651

583

585

-More than 50% state-owned enterprise

258

265

284

390

388

- Non-state enterprise, including

22

18

18

18

16

+ Private companies

13

9,8

9,8

9,8

8,6

+ Others

24

19,7

19

18

16,9

Ennterprise with foreign investment capital

2972

312

316

297

279

Total

34.8

30

29

27.7

25.9

Source: General Statistics Office 2017
2.1.5. Fixed asset value and long-term financial investment in SOEs
Although the number of SOEs is not much compared to non-state enterprises, however, the
value of fixed assets and long-term financial investments in SOEs are similar, even higher in
2015. The value of investment in 2016 of SOEs had a slight decrease, but for SOEs with more
than 50% of state capital, the investment value increased by about 20%.
Table 2.4: Value of fixed assets and long-term investments at enterprises
Unit: trillion of VND
Year

SOEs

2010

2014

2015

1758.9 3358.6 4599.7

2016

2017

4366.6 4566.5


12
-100% state-owned enterprises
-More than 50% state-owned enterprise

1140.9 2429.5 3171.4
618

929.1

1426.3

- Non-state enterprise, including

2129.7 3455.8

3862

+ Private companies

126.1

124.2

+ Others

2003.6 3360.2 3737.8

95.6

2597.8 2589.2
1768.8 1977.3
5856.5 6891.6
86.5

236.9

5770.0 6654.7

Ennterprise with foreign investment
4366.6 4566.5
1758.9 3358.6 4599.7
capital
Total

1140.9 2429.5 3171.4

2597.8 2589.2

Source: General Statistics Office 2017
2.1.6 Organizational model for SOEs in Vietnam
In Vietnam, SOEs are managed under the Enterprise Law (2014).
i. SOEs with 100% state capital
Under the 2014 Enterprise Law, SOEs with 100% state capital operate under the form of
one-member limited liability companies are managed and operated under one of the following
two models:
1) President, Director or General Director and Supervisor;
2) Member's Council, Director or General Director and Supervisor.
ii. SOEs with 50% to less than 100% of state capital
State-owned enterprises with 50% to less than 100% of state ownership, depending on the
type of enterprises, have a corresponding corporate governance model, including limited liability
companies with two or more members and joint stock companies.
iii. Economic group
The organizational structure of economic groups including: parent companies (level 1),
subsidiaries (level 2) and affiliates and enterprises under affiliates. The management structure of
the Economic Group is the Board of Directors / Members’ Council - General Director Supervisory Board or Board of Directors / Members’ Council - General Director - Supervisors.
2.1.7. Business management model for SOEs
Functions and duties of owners in SOEs are often carried out by the Prime Minister, line
ministries and provincial People's Committees (PPCs). Based on their authority, they will appoint
representatives of the State capital, who have the right to nominate members of Board of
Directors and CEO of the company; and also directly involved in approving business strategies,
business plans, budgets, large-scale investment projects, lending and investing/divesting, and
appointing personnel. The relationship between SOEs and government levels is divided into two
levels: the central level (the Prime Minister and the ministries) and the provincial level (PPC).

The Prime Minister directly represents State ownership in the parent companies of economic
groups, State Corporations, large scale and important SOEs established by the Prime Minister.
One of the major changes of the state capital management model is that the Government
has just issued Resolution 09/2018 / NQ-CP to establish the State Capital Management
Committee at enterprises. The State Capital Management Committee at enterprises is a
Government-attached agency performing function of representing the ownership of enterprises
owned by the State with 100% charter capital and state capital invested in joint stock company,
limited liability companies with two or more members as prescribed by law.
2.1.8. Business results of state-owned enterprises in Vietnam


13
2.1.8.1. General business results
i. Revenue
Revenue of SOEs still accounts for a significant proportion of total revenue compared to all other
types of enterprises.
Table 2.5: Revenue of SOEs from 2010-2016
Unit: trillions of VND
2016

2017

-100% state-owned enterprises

2033.50 2960.80 2722.20 2865.5

3126.3

-More than 50% state-owned
enterprise

- Non-state enterprise, including

1.517.6

1785.4

1660 1811.3

2036.9

515.9

1175.4

1056.2 1054.2

1089.4

+ Private companies

4048.2

7039.5

8075.1 9762.1 11737.1

391.4

532.7

3776.8

6506.8

7558.9 9220.4 11263.6

136

3515.7

4151.9 4808.8

SOEs

+ Others
Ennterprise with foreign investment
capital
Total

2010

2014

2015

516.2

541.7

473.5

5800.9

Source: General Statistics Office 2018
ii. In terms of profit, the profit margin of SOEs also reached 5-6%, peaked in 2016 by
6.3%(100% state-owned enterprises) and 6.9% More than 50% state-owned enterprise ), higher
than the profit margin of non-state enterprises, but lower than enterprises with foreign investment.
2.1.8.2 Business results of SOEs with 100% State-owned
In terms of SOEs with 100% capital owned by the State, in three years of 2014-2016, the
situation of total assets, revenue and profit also decreasing was due to the number of SOEs was
narrowing. However, it is worrisome that the profit margin tends to be from 15.2% in 2014, down
to 10% in 2016. This shows the business efficiency of 100% state-owned enterprise also has
many problems.
2.1.8.3. Business results of listed SOEs:
In terms of privatized SOEs that are listed on Vietnamese stock market and have 50% of
state capital and above, profit margin was around 10% , which all higher than of 100% stateowned enterprises mentioned above.
2.1.9 General assessment of SOEs:
So far, Vietnamese SOEs are still an important tool to ensure effective implementation of
macro stabilization policies, control inflation, deal with market fluctuation and generate revenue
for the State budget. SOEs with state capital contribution also play a major role in
implementation of providing public products and services, some SOEs in field of
telecommunications services, infrastructure investment are still promoted strength in the market
economy. SOEs also create jobs for workers and bring large revenue to the economy. Yet SOEs
have many limitations such as: production and business efficiency and contribution of some
SOEs are still low, not relatively to the State's investment resources, major losses still occur; the
mechanism of SOE governance is slow to be reformed and ineffective, not suitable with
international practices and standards; the separation of state management functions and the
functions of state capital representative agencies in SOEs is slow; Many SOEs have not fully
implemented the reporting regime for enterprises with representative agencies of owners and
financial agencies as prescribed; The mechanism of punishment the managers as wrongdoings as

well as handling violations of supervision and evaluation of SOE performance has not been fully
and seriously implemented.


14
2.2. Status of regulations on information transparency at SOEs
The system of legal documents regulating publication and transparency of information in
SOEs can be divided into the following two groups:
2.2.1. Provisions for SOEs are 100% owned by the State
In addition to the 2014 Enterprise Law, SOEs with 100% capital owned by the State need
to comply with regulations on information disclosure and transparency in the following legal
documents: Decree No. 81/2015 / ND-CP dated 18 September 2015 on information disclosure of
SOEs regulating compulsory content disclosure, organization of information disclosure,
electronic information portal of enterprises and regulations on handling violations of information
disclosure.
2.2.2. Provisions for SOEs with 50% to less 100% State capital
In addition to the provisions of the Enterprise Law 2014, listed SOEs with 50% to less
than 100% of state capital must also comply with securities provisions such as Securities Law
2006 and the Law on amendments and supplements of articles of Securities Law of 2010,
Circular No. 155/2015 / TT-BTC (Circular 155) guiding information disclosure on the stock
market, Circular 121/2012 / TT-BTC dated 26/2012 7/2012 of the Ministry of Finance regulating
on corporate governance applicable to public companies
2.2.3. Evaluation of legal regulations related to information transparency at state-owned
enterprises
The system of legal documents related to information transparency in SOEs is presently
quite complete, approaching to the information transparency requirements of international
organizations. However, for unlisted SOEs and 100% state-owned SOEs, sanctions are in general,
mainly warning, reprimand and administrative sanctions with quite low penalties. On the other
hand, on the means of information disclosure, SOEs with 100% state ownership are mainly
published on the website and related management agencies, including the representative agencies,

Ministry of Planning and Investment, Ministry of Finance ... leads to the publication of
overlapped information, while the information disclosure obligations of these agencies are not
clear. Meanwhile, for listed SOEs, the method of information disclosure of enterprises as well as
the management agency as the stock exchanges departments are clearly prescribed by law.
2.3. Status of information transparency of SOE in Vietnam
2.3.1. Compulsory information transparency
2.3.1.1. Unlisted SOEs:
i. Relevance
According to the report of the Ministry of Planning and Investment on status of information
disclosure of SOEs in 2017, as of December 31, 2017, there were only 265/622 enterprises
(accounting for 42.6% of enterprises) sending reports to the Ministry of Planning and Investment
to publish information on the Enterprise Portal. Of the total 9 types of reports that must be
published in accordance with the provisions of Decree No. 81/2015 / ND-CP, most of the 265
enterprises has not disclosed fully information, on average, each enterprise only publishes about
5/9 types of reports. According to the Ministry of Planning and Investment (2018), as of
December 31, 2017, 55/ 77 enterprises (accounting for 71.42%) are economic groups, state
corporations or large enterprises belonging to ministries, people’s committee of provinces and
cities under central have made information disclosure in accordance with Decree 81/2015 / NDCP; Nonetheless, most businesses have not implemented fully and on time as required in this
Decree. Only 2/5 economic groups (VNPT, PVN) strictly and fully disclosed information
(announced 9/9 reports on the announced deadline).
The author conducted a survey on information transparency in SOEs based on widely published
information on media. Regarding the survey criteria, also through a preliminary survey, SOEs
announced very limited information. Voluntary information. Therefore, the author only conducts
surveys on compulsory disclosure of information according to Decree 81/2015 / ND-CP. The
above information is listed and scored. For contents that have disclosed the information,
businesses will get 1 point. Non-performing content will get 0 points.


15
Table 2.17. Transparent information survey of SOEs

Number
1
2
3
4

Question
Does the company have a website?
Does the website have a separate section on Information Disclosure /
Information Disclosure?
Does the company announce development strategy?

Does the company announce 5-year plan of business - production and
development investment?
5
Does the company announce annual plan of business - production and
development investment?
6
Does the company announce report assessing results of implementing annual
plan of business - production and development investment?
7
Does the company announce report assessing results of implementing 3latest- year (to reported year) plan of business - production and development
8
Does the company announce report of results of implementing corporate
investment?
social responsibilities?
9
Does the company announce report of status of implementing annual
arrangement, innovation of enterprise
10

Does the company announce report of status of business management and
organizational structure?
11
Does the company announce 6-month financial report, year-ended financial
statement?
12 Does the company announce report of benefit and compensation policy of
enterprise?
Source: Decree 81/2015 / ND-CP
The results as follows:
Bảng 2.13. Surveyed results of information transparency for unlisted SOEs
2016
2017
2018
More
More
More
than
than
than
100%
50%
100%
50%
100%
50%
statestatestatestatestatestateowned
owned
owned
owned
owned

owned
Tota enterpris enterpri Tota enterpris enterpri Tota enterpris enterpri
Value
l
es
se
l
es
se
l
es
se
Mean
6.4
6.2
6.5
7.4
7.4
7.5
6.0
5.7
6.0
Max
9
9
9
10
10
10
11

11
11
Min
2
2
3
3
3
3
2
2
2
Observatio
ns
28
11
17
30
16
17
33
18
15
Sources: Author’s results
ii. Timeliness:
Regarding to report of Ministry of Planning and Investment, many SOEs do not disclose
information on time. For instance, Vietnam Railways, deadline for announcing plan of production
business and development investment in 2016 was on 31 March 2016, but it was not until 21
December 2016, Vietnam Railways announced, which means the publication was late nearly 9
months behind the deadline.

iii. Reliability


16
There is not much basis to evaluate reliability of information disclosure of SOEs.
Report of status of SOE information disclosure in 2016 shows that only six economic groups
have hired independent auditors to complete the financial statements 2015 as prescribed. In
which, 3 economic groups hired international auditing companies in Vietnam to conduct audits
(VNPT hired E&Y, EVN and PVN hire Deloitte), 3 economic corporations hired domestic
auditing companies to implement (VRG hired Vietnam Auditing and Valuation Company
Limited AVA, Vinachem to hire AASC Auditing Firm, TKV to hire PKF Company Limited).
On the other hand, information on sanctioning SOEs violating regulations on information
disclosure related to the reliability of information is also limited and hardly available. Therefore,
the author does not have enough basis to assess the publicity, transparency and objectivity in
assessing production, business, revenue and profit of these SOEs
iv. Accessibility
Currently, the popular channels for investors to access SOE information is the information
channel of the State management agency (Ministry of Planning and Investment), the management
agencies of SOE ownership, information from financial information intermediaries, information
channels from SOEs. For the information channel of the State management agencies, namely the
electronic information portal of the Ministry of Planning and Investment (www.business.gov.vn),
it is mainly periodic information and unusual information is rarely updated on this portal. The
update of this site is also restricted when many enterprises still do not have information
published. For information portals of state-owned representative agencies, as of December 31,
2017, there were only 6/15 ministries and ministerial-level agencies (only units with state
enterprises included), 8 / 63 provinces and cities under central and 6/6 economic groups are
subject to information disclosure with their own sections under this regulation. For website of
SOEs: most enterprises have information disclosure section, which provides information about
annual financial reports, corporate governance reports, and business - production situation
monthly sales. However, the information required by law to be transparent is not complete or not

updated.
v. Responsibility of the information disclosure party
On SOE websites, information on information publishers or information disclosure
authorizations as well as officers responsible for information disclosure is difficult to find.
Therefore, if investors have questions and requests for explanation, it is very difficult to approach
the specialized person of the company. The explanatory information also mainly complies with
the legal regulations on accountability, and the explanation required by investors is rare.
2.3.1.2. For listed SOEs on stock market
In 2016, 2017 nd 2018, Vietstock's online information portal of finance and securities, in
collaboration with the “Tai chinh va Cuoc song” newspaper, with the sponsorship of the Vietnam
Association of Financial Managers conducted a survey on the compliance levels of regulations on
compulsory disclosure of information under Circular 155/2016 / TT-BTC of the Ministry of
Finance on information disclosure on the stock market. The results show that the number of SOEs
meeting information disclosure standards has increased.
2.3.2. Transparency of voluntary information
2.3.2.1. For unlisted SOEs
Most of the 44 SOEs surveyed did not disclose voluntary information above. This shows
that the voluntary information transparency of unlisted SOEs is weak in quantity and quality.
2.3.2.2. For listed SOEs on the stock market
The author based on the study of Pham Duc Hieu and Do Thi Huong Lan (2015), Vu's study
(2012) as well as Circular 155/2015 / TT-BTC guiding information disclosure on the stock
market, the author has listed 30 evaluation criteria of 3 main voluntary information groups listed
by companies, including: Company and Strategy Information (10 criteria); Financial information
and capital market information (12 criteria); forecasting information (8 criteria) (see Appendix 3).


17
Each criterion with information disclosure is relative to 1 point. The author has conducted a
survey of voluntary information transparency of 158 SOEs listed on the stock market in 2017 and
2018 based on the information published by enterprises, including annual reports and websites of

enterprises
Table 2.15: Voluntary information transparency survey results of listed SOEs
Point

Min Max Mean

Standard deviation

VDSC (Enterprise and Strategy Information)

0

9

2.1/10

2.2456

VDFC (Financial and capital market information)

0

11

4.2/12

1.8791

VDFL (Forecasting information)

0

7

2.1/8

1.4120

VIDI (Vietnamese information disclosure index)

2

22

8.4/30

3.6378

Source: Results of the author's investigation
Thus, the voluntary information transparency of listed SOEs in 2017 and 2018 is quite weak. The
average score is 8.4/30 points, equivalent to nearly 30%, the lowest level is 2 points and the
highest is 22/30 points. Considering each published information group, the information group
about businesses and business strategies has the worst performance with the highest standard
deviation, financial information has the best.
2.4. Analysis of financial factors affecting information transparency in SOEs
2.4.1. Research model
Research hypothesis
Table 2.18: Hypothesis of model
Explanatory variables

Theoretically
influencing sign
+

Theoretically
influencing sign
+

Business performance efficiency
(ROA, ROE)
Efficiency of use of asset (TURN)

+

+

+

+

Tangible asset (TANG)

+/-

+

Financial leverage (LEV)

-

-

Enterprise scale (SIZE)

The model is built on five financial characteristics of an enterprise to test the factors affecting the
level of information transparency, including business size, business performance of enterprises,
efficiency of use of assets, proportion of fixed assets and financial advantage:
Model (1):
MBTTit = β0 + β1SIZE(X) it + β2 ROA(X) it + β1 TURNit + β4 TANGit + β5LEVit + εi
Model (2):
MBTTit = β0 + β1SIZE(X) it + β2 ROE(X) it + β1 TURNit + β4 TANGit + β5LEVit + εi
In which:
- MBTTit: is the dependent variable, showing the level of information transparency of
Enterprise i in time t; The MBTT variable for unlisted SOEs (Group 1) is based on scoring
in table 2.12 above. The MBTT variable for SOEs listed on the stock market (Group 2)
based on the survey results of Vietstock in 2 years 2016 and 2017, if the enterprise meets
the information disclosure standard, it scores 1, or else it receives a value of 0.
- SIZEit = natural logarithm of total assets of Enterprise i in t-1 period;
- ROAit: Return on total assets of Enterprise i in t-1 period;


18
-

ROEit: Return on equity of ENterprise i in t-1 period
TURNit: Turnover of total assets of Enterprise i in t-1 period;
TANGit: this is n ratio of fixed assets to total assets of Enterprise i in the period of t-1;
LEVit: this is a ratio of liabilities to total assets, calculated according to the Debt / Total
assets formula during t-1 period.
The financial data of enterprises are gathered from the financial statements of unlisted and listed

SOEs in 2016, 2017 and 2018. For group 1, after some observations, there are not enough
financial and sample data then the remaining are 91 observations. For group 2, the sample
consists of 217 observations.
2.4.2 Statistical and correlation description
SOEs in group 1 have average average points of 6.6 / 12 points, businesses with average
average assets of VND 66400 billion, average ROA of 3.8%, average ROE of 6.6%, average
fixed assets ratio (TANG) 32% of total assets and the average debt ratio is 48%, the average asset
turnover is 0.91 rounds. Enterprises in group 2 have average total assets of VND 4620 billion,
average ROA of 8%, average ROE of 13.7%, fixed asset ratio (TANG) of 28.6% of total assets
and average debt ratio is 46%, the average asset turnover is 1.2 rounds. Thus, except for the
smaller scale and fixed assets ratio of SOEs in group 2, profitability of group 2 SOEs (including
ROE, ROA) is better than group 1. The debt ratio of the two groups is similar. In terms of
correlation, correlation coefficient between variables of the two groups is less than 0.5, still in
allowed limitation on correlation coefficient. Thus, there is no multicollinearity phenomenon
here.
2.4.3. Regression results
The author proceeded to run OLS with MBTT - dependent variable and 4 independent
variables and 1 control variable for 2 groups of SOEs mentioned above. The results are shown in
Table 2.24.

Table 2.23. Regression result for 2 groups of SOEs
Group 1

Group 2

Group 1

Group 2

Coefficient PCoefficient PCoefficient PCoefficient Pvalue

value
value
value
0.228* 0.055
0.0001 0.998
0.223* 0.057
0.0015 0.957

LnSize
TURN

0.321

0.451

0.0168

0.571

0.388

0.349

0.0202

0.496

TANG

1.473

0.181

-0.0994

0.493

1.469

0.174

-0.0763

0.602

-4.26E-16

0.823

0.0274

0.878

2.34E-16

0.902

-0.1189

0.469

0.008 0.7867***

0.005

0.703

0.588

ROE
ROA

14.051***

LEV

7.322**

Intercept

-1.309

R2
Number
observations

of

0.026 1.3471***

0.002

0.706

0.681

0.3062

-1.30404

0.4054

14%

16%

12%

15.5%

91

217

91

217

.Source: Author’s summary from STATA

19
Note: * and ** refer to the estimated coefficients (shown in bold) in Table 2.21
which are statistically significant at 5% and 1% respectively.
Through the above regression results, for group 1, Prob (F-statistic) model of model 1 is
0.0065, model 2 is 0.0076 indicating that the models are suitable for R-square respectively 14%
and 12% showed that 14% and 12% of variation of information transparency in SOEs in the
period of 2016-2018 is explained by the variables in the model (1) and (2). The model studies the
influence degree of the factors such as firm size, profitability on information transparency of
SOEs.
2.5. Assessment of status of information transparency at SOEs
2.5.1. Achievements
- The publication of information on the operation of state-owned enterprises has improved
over time, initially created transparency in society, become an effective tool for the State to
monitor usage of the State's resources in these enterprises, avoid frauds, ineffective use, loss and
waste of resources.
- Most SOEs have their own information channels to serve information publication.
- The information content is getting more and more complete and timely.
- Information transparency in SOEs is assessed as increasing stability, creating trust in
society for SOEs, initially helping state agencies in managing usage of state capital in private
business.
2.5.2. Constraints
- The compulsory information transparency of SOEs is implemented formally.
- Voluntary information transparency has not been taken seriously.
- The role of information disclosure of the representative agencies is still unclear.
- Responsibility for information disclosure has not been focused.
2.5.3. Reasons for constraints
2.5.3.1. Reasons from SOEs
First, poor performance of SOEs is considered one of the main reasons for
inadequate information transparency motivation. Secondly, SOEs themselves are not fully aware

of the role of information disclosure, benefits directly affecting the operational efficiency of
enterprises and ability to attract investors in the market. Thirdly, corporate governance of SOEs is
mostly inefficient. Fourthly, it is the issue of costs and benefits of information transparency for
information disclosure objects in the market. Benefits of information transparency, as mentioned
in Chapter 1, are the increase in business efficiency, ability to raise capital, increase stock prices
... in Vietnam's conditions are not clear. Therefore, SOEs are not motivated to implement
information transparency on the stock market.
2.5.3.2. Reasons outside SOEs
Fifthly, the legal regulations on handling violations of information disclosure are
inadequate against the seriousness of the non-transparency of information.
Sixthly, the process of sanctioning information transparency violations of state
management agencies has not focused on considering responsibilities of related parties to handle
the right people and the right jobs.
Seventhly, state management limits and overlaps.
Eighthly, the technical and information infrastructure system serving for information
disclosure is still weak, which leads to increase in risks for investors.
Ninthly, it is the state-owned representations themselves, in charge of SOEs that perform
poorly information transparency. This leads to common thoughts that SOEs will not comply with
the requirements set by the Ministry, and ignore the regulations on information disclosure.
Tenthly, independent auditing and credit rating that are not effective.


20
CHAPTER 3 SOLUTIONS FOR ENHANCING INFORMATION TRANSPARENCY
OF SOEs IN VIETNAM
3.1. Orientation of information transparency of SOEs in Vietnam
It can be said that the role of SOEs in Vietnam's economy in the past is undeniable. In the
future, the Party and the Government still claim that SOEs continue to be the core force of the
state economy, an material force, as a support tool for the State to regulate the economy, stabilize
macroeconomic and contributing to promote the socio-economic development of the country

towards socialist orientation.
Viewpoints on implementing information transparency at SOEs
- Information transparency at SOEs ensures the principle, that state-owned enterprises
operate according to the market mechanism, taking economic efficiency as the primary evaluation
criteria, self-reliance, self-responsibility, fair competition with enterprises of other economic
sectors as prescribed by law.
- Information transparency is an inevitable trend of all economies.
- Pressure from development of 4.0 industrial revolution with Big Data, Internet of things,
machine learning, and blockchain… makes information transparency more powerful.
- Information transparency of SOEs follows international regulations, standards.
3.2. Solutions enhancing information transparency of SOEs
3.2.1. Enhancing business efficiency of SOEs
The research results in Chapter 2 have shown that the larger size of SOEs is, the higher the
business efficiency will be the more important information transparency of the enterprises is.
Therefore, enhancing business efficiency of these enterprises will be one of the important
solutions to implement information transparency.
To improve business efficiency, SOEs need to focus on the following contents:
- Restructuring the fields of business, re-evaluating the effectiveness of each project,
avoiding widespread investment outside core business areas and unable to control effectively.
- Restructuring the market: SOEs need to reevaluate the business market, forecast market
fluctuations, reevaluate products in business, pay attention to quality innovation, packaging,
implement business, marketing strategy professionally
- Optimize resources used in the enterprise, including machinery, fixed assets, staff
capacity, and labor force, shorten production processes, eliminate waste in enterprise.
- Restructuring capital in enterprises, which gradually reduces the high debt ratio in SOEs,
resolving financial problems through debt trading companies or marketizing debts.
- Need for statistical evaluation the enterprises with low/ high profit margins so that the
State can review the investment. Accordingly, for businesses with low profit margins, investment
is limited. However, businesses with high profit margins of 20-30%, they should be invested
more so that after a few years, big economic corporations will be established.

-Increasing training to improve qualification of business management staff to meet the
management requirements in the market mechanism.
3.2.2. Completing the corporate governance system
In order to complete the corporate governance system in SOEs, it is necessary to focus on
the following main contents:
i. Role of independent BOD members and decision-making mechanism of the Board
To ensure the balance and effectiveness of the board of directors' activities, SOEs should
focus on the participation of independent members and the decision-making mechanism of the
Board. Independent members, decision-making mechanism and processes of the Board are very
important because it is related to many significant issues such as: approving strategic plans,
approving business and financial plans of enterprises, decisions relating to organization of the


21
annual general meeting of shareholders, electing the Chairman of the Board of
Directors, increasing charter capital, issuing shares, restructuring the organization ...
ii. Shareholders' rights assurance
Ensuring implementation through mechanisms to encourage shareholders to exercise their
rights, especially voting rights, or grouping together to exercise their rights, shareholders are free
to access other information about external enterprises; information according to regulations ...
must be implemented fully, properly and promptly.
iii. Internal control and audit system
A highly independent internal control and auditing system ensures corporate governance
efficiency, thenceforth, transparent governance and accountability become one of the top
priorities of the business.
3.2.3. Raising awareness and responsibility of SOE managers for information transparency
The process of hiring managers for SOEs needs to be strict and meet international
standards more, in which good managers not only have professional capacity, experience, and
network of relations but also have the integrity and legal compliance.
3.2.4. Developing a code of conduct and ethics for state-owned enterprises

The promulgation and implementation of codes of conduct and ethics in enterprises, which
regulates information transparency obligations of individuals, including business managers,
Board members ... For stakeholders of enterprises such as shareholders, employees, creditors ...
will contribute to enhancing the transparency of information in enterprises.
3.2.5. Development of information systems in enterprises
First of all, improving the quality of information is reflected in factors ensuring the
accuracy of the data presented in the financial statements. Besides, improving information
capacity is reflected in factors that enhance the information presented in the financial statements.
On the other hand, enterprises need to pay attention to the development of information disclosure
policies in enterprises and the mechanism of determining personal responsibility to participate in
the information disclosure process. SOEs also need to have a plan to develop information
technology infrastructure in order to actively participate in integrating into state management
database, and provide financial reports with advanced format.
3.2.6 Focus on transparency of sustainable development information of SOEs
In order to enhance voluntary transparency of SOEs, enterprises themselves need to raise
awareness about sustainable development reports, essentially providing voluntary information,
including environmental and social and community information. Currently, the three main
organizations provide standards, guidelines for sustainability reporting, which according to the
author are the most comprehensive in terms of environment, society and economy; These are:
GRI (GRI - Global Report Innitiative), SASB (Sustainable accounting standards board) and IIRC
(International Integrated Reporting Council), in which GRI is the most widely known and used
standard for sustainability reporting, is for businesses to start developing sustainability reports, to
keep them simple. SOEs can refer to SASB or GRI standards to see important, useful information
for investors, minimum cost-effectiveness and reporting required. Single sustainable development
in accordance with standards such as GRI, SASB, enterprises can advance to a higher step than
product Combine the information obtained from sustainable development reports into corporate
governance and operations.
3.3. Proposals for State ownership representative agencies
3.3.1. Develop and implement general reports on entire SOEs on an annual basis according
to international practices

According to OECD (2005), general report should focus mainly on financial information
and value of SOEs. The report provides general information on the value of state assets, a
statement of state capital management policies and information regarding to how to implement
policies. The financial statements in the report include asset turnover, profit, and cash flow from


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business operations, total investment, and return on equity, debt ratio, and dividend
payout ratio. The report also provides analytical information for each specific SOE. According to
OECD recommendations, the report should be provided on a 6-month basis.
3.3.2. Developing a set of monitoring tools for SOEs performance according to superior
international practices in the world
Owners should be active and proactive in setting targets that SOEs must implement. The
development of these indicators needs to be compared to enterprises in the same industry, as well
as supplementing indicators according to good practices such as labor productivity, export value,
technology level, level of information disclosure of enterprises.
3.3.3. Building information technology infrastructure system to operate the function of
representative of ownership representative agency
Quality technology infrastructure helps management decisions of the owner agency more
properly, more timely and more efficiently. Algorithms and data analysis tools can be applied,
even application of artificial intelligence to serve the analysis, forecast and decision making of
owner agencies. To accomplish this, the owner agencies need to invest in building and operating
a monitoring information system, connect online with SOEs, this system can automatically
evaluate and compare implementing indicators with planning targets, assess the progress of
implementing projects, social tasks on the same database collected from enterprises.
3.3.4. Application of a set of corporate governance rules for SOEs
In 2015, SCIC signed a cooperation agreement with Japan International Cooperation
Agency (JICA) then JICA supported the construction of corporate governance rules (referred as
CGC) for enterprises with contributed capital of SCIC. The difference of CGC with the legal
documents of the state on corporate governance is not compulsory but enterprises can "apply" or

"explain". CGC sets higher requirements than the law, in order to help businesses further improve
their corporate governance system. At the same time, with the characteristics of companies on
SCIC's portfolio, there is a big difference in scale, scope of operation, business model,
organizational structure, management method, risk profile. ...
When implementing effectively at SCIC's member units, the rules can be completed and applied
for enterprises with 100% State capital and 50% or more of State capital.
3.4. Proposals for State management agencies and other related parties
3.4.1. Promoting the process of equitization, reducing state ownership, eliminating
preferential treatment for SOEs
This is both a policy for development of SOEs in the future and a solution to enhance
information transparency for SOEs. The equitization will help reduce the number of SOEs 100%
owned by the State to form a joint stock company or a limited liability company with 2 or more
members, thereby creating information disclosure pressure on these SOEs.
3.4.2. Innovating SOE management model
Although the current model for managing state capital in SOEs has made progress, there
are still many overlaps in management. The current mechanism is inappropriate since as being
assigned as state ownership representative, many ministries implement the owner's authority
ineffiently and no specific government official is responsible for operational efficiency of SOEs.
Specifically, SOEs in Vietnam need a more active and proactive state-owned agency.
3.4.3. Improving legal framework for SOE information disclosure
3.4.3.1. Agreement on regulations on SOE information disclosure
Currently, there are differences in regulations on information disclosure between SOEs
100% owned by the State and unlisted SOEs from 50% capital owned by state and listed SOEs
from 50% of the state owned capital on Vietnamese stock market. In particular, the regulations
for listed SOEs are the most specific, closely followed by regulations on handling violations.
Considering that SOEs are a special object of enterprises, it is necessary to have strict