Đổi mới quản trị nhằm nâng cao năng lực cạnh tranh trong các doanh nghiệp nhà nước TT tiếng anh

MINISTRY OF TRAINING AND EDUCATION
FOREIGN TRADE UNIVERSITY

SUMMARY OF PHD THESIS

MANAGEMENT INNOVATION TO IMPROVE
THE COMPETITIVE CAPABILITY IN STATE
OWNED ENTERPRISES

Discipline: Business Administration

LE QUOC KHANH

HANOI - 2020


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MINISTRY OF TRAINING AND EDUCATION
FOREIGN TRADE UNIVERSITY

SUMMARY OF PHD THESIS

MANAGEMENT INNOVATION TO IMPROVE
THE COMPETITIVE CAPABILITY IN STATE
OWNED ENTERPRISES

Discipline: Business Administration
Code number: 9340101

LE QUOC KHANH

Supervisor: Assoc. Prof. Dr. Tang Van Nghia

HANOI - 2020
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LIST OF PUBLICATIONS
1.

Lê Quốc Khanh, 2019, Quản trị doanh nghiệp
nhà nước ở Việt Nam và bài học kinh nghiệm
của một số quốc gia, Tạp chí Dân chủ và pháp

luật số 2 (323) tháng 2 năm 2019
2. Lê Quốc Khanh, 2019, Đổi mới cạnh tranh của
doanh nghiệp Nhà nước, Tạp chí kinh tế đối
ngoại số 115 tháng 3 năm 2019

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INTRODUCTION
1. Rationale of the topic
In the context of market economy and international integration, the
competitive capability of an enterprise is a factor that determines the
success of that enterprise. Competitive capability is also the key of

enterprises to penetrate the world market and grow. The prerequisite for
reforming and improving the performance of enterprises is the need to
improve corporate governance efficiency in enterprises, especially in
SOEs.
State-owned enterprises (SOEs) hold a number of key sectors and
fields, the most important infrastructure system for industrialization and
modernization of the country, and master the lifeline of socio-economic
infrastructure. Most of the big enterprises are those in construction,
electronics, chemicals, communications, rail transport, consumer
technology manufacturing industries, etc., so they play an important
position in orbit as well as economic development orientation of
Vietnam. SOEs are holding key resources and sectors of the economy
and contributing greatly to the country's GDP.
At present, many SOEs have made many positive changes,
showing their leading role in the economy, however, many SOEs still
show weaknesses, exist and are not commensurate with the
requirements. and availability of SOEs. The current mechanism of SOEs
governance is unclear and coherent, leading to inefficient SOEs
restructuring in the past. One of the reasons is that SOEs governance
activities are slowly renovated, not keeping up with the requirements of
development according to market mechanisms and international


5

practices, failing to meet the requirements of the restructuring process of
enterprises.
From the above analyzes, the PhD student has chosen the topic of
"Management innovation to improve competitive capability in Stateowned enterprises" as my doctoral dissertation project with the desire to
contribute to administrative innovation through which improve

operational efficiency and improve the competitive capability of SOEs.
2. Research objectives and missions
2.1. Research objective
The thesis researches, additionally contributes to a number of
theoretical issues about corporate governance in SOEs today. On the
basis of assessing the current situation of corporate governance in
Vietnamese SOEs, analyzing its impact on the competitive capability
since the period of economic mechanism transformation, the thesis
proposes innovative solutions to SOE governance to improve high
competitive capability in the context of strong competition in the market
economy and international integration of Vietnam.
2.2. Research mission
In order to achieve the research objectives, the thesis addresses the
following specific research tasks:
- Clarifying theoretical issues about SOEs and SOE governance
including corporate governance and business administration; on the
competitive capability of the business; clarify the characteristics and
role of corporate governance for the competitive capability of SOEs;
- Systematize and supplement the theoretical basis for the
governance of SOEs and the competitive capability of state-owned
enterprises, reform of SOE governance as well as the relationship


6

between corporate governance innovation and the competitive capability
of SOEs in Vietnam;
- Analyze and assess corporate governance practices, evaluate
some key governance contents in Vietnamese SOEs, factors affecting
corporate governance efficiency in these enterprises;

- Proposing solutions to SOE governance innovation, thereby
raising the competitive capability and finally, improving the efficiency
of Vietnam's SOE activities, contributing to improve the quality and
efficiency

of

enterprises'

operations

and

promote

economic

development.
3. Research subject and scope
3.1. Research subjects
The research object of the thesis is SOE governance, SOE
governance innovation, SOE competitive capability as well as the role
of governance innovation on SOEs' competitive capability (theory and
practice). In addition, the thesis also studies the policy framework, laws,
state management of SOEs, SOE governance, as well as factors
affecting SOE governance efficiency. The thesis also mentions and
studies corporate governance practices in the world in order to draw
some relevant lessons for Vietnamese SOEs.
3.2. Research scope
- Regarding the content: The research scope of the thesis is limited

to corporate governance and focus on SOE governance, some aspects of
business administration related to competitive capability as well as
performance of SOEs and the current situation of SOE governance in
Vietnam, factors affecting corporate governance efficiency and solutions


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of management innovation to improve the competitive capability of
SOEs in Vietnam.
4. Research Methodology
4.1. Research methodology
The thesis is based on the research methodology of dialectical
materialism and historical materialism. The Party's views on market
economy development, corporate governance and SOE development are
also a guideline for the research methodology of the topic.
4.2. Specific research methods
To implement the thesis, the author has used qualitative research
methods that are mainly combined with quantitative research methods.
The qualitative research methods are basically including: analytical synthesis method, comparison - comparison method, statistical method,
systematization method and interpretation method.
5. New contributions of the thesis
- Clarify and contribute to additional academic issues on corporate
governance, SOE governance and SOE competitive capability;
conceptual issues, characteristics of the role of SOEs as well as
governance activities, performance of SOEs.
- Clarify the impact of SOE governance activities on the
competitive

capability

of

SOEs

theoretically

and

practically,

emphasizing the important and core role of governance innovation in
improving the competitive capability of SOEs in Vietnam.
- Clarify the inadequacies, challenges and even weaknesses of
current SOE governance, based on which highlights the issues posed
and challenges when implementing governance reforms to improve the
competitive capability and efficiency of the SOEs.


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- The solutions and recommendations in the thesis contribute to the
renovation of SOE governance, especially large economic corporations
in order to improve the competitive capability of SOEs in the era of
strong competition with private sector enterprises.
6. The structure of the thesis
This thesis, in addition to the introduction, conclusion, list of
references, appendices and structures of the thesis, includes:
Chapter I. Overview of the research situation and the theoretical
basis of the topic

Chapter II. Theoretical issues on SOE governance and State-owned
enterprises' competitive capability.
Chapter III Current situation of SOE governance in Vietnam and
lessons learned from a number of countries.
Chapter IV Perspectives, goals and solutions to renovate
governance to improve the competitive capability of state-owned
enterprises.


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CHAPTER 1: OVERVIEW OF RESEARCH SITUATION
RELATED TO THE THESIS THEMES
1.1. Literature review of the topic
1.1.1. Oversea researches
In the world, there have been many research works, articles
addressing each individual issue of corporate governance, SOE
governance and SOE competitive capability. Typically, there are the
following works:
1.1.1.1. Corporate governance and business administration
research group
There are many studies in the world that have mentioned the
concept of corporate governance. One of the earliest studies was The
Modern Corporation and Private Property by Berle and Means (1932).
This work began to address the concept of corporate governance and
later became the basis for many other studies Corporate governance here
is understood as the process, procedures, policies, regulations, laws and
institutions to guide organizations and enterprises how to act, operate
and control their activities to achieve the set goals.
1.1.1.2. Research group on SOE governance and SOE governance

innovation
SOE governance has always been a concern of many countries,
international organizations and scientists. Regarding the management of
SOEs, typically the 2006 Guide to Corporate Governance of SOEs,
OECD provides six basic guidelines. Research by World Bank (2014),
Transparency of SOEs in Vietnam - current status and ideas for reform


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but with the idea of information transparency starting from "Economic
group, then expanding to general corporations, and finally the remaining
100% state owned SOEs" indirectly agreed to the concept.
1.1.1.3. The group of studies on the relationship between
corporate governance and improving the competitive capability of stateowned enterprises
The research on corporate governance in the world has been very
popular in recent years, especially since the 2000s when corporate
governance practices in the world have generated many problems and
activities of joint stock companies are increasingly complex and diverse.
The above studies have created a fairly complete theoretical basis for
corporate governance and suggest theoretical and practical issues in the
governance of State-owned enterprises.
1.1.2. Researches in Vietnam
1.1.2.1. Research group on corporate governance and SOE
governance
In Vietnam, there are many studies on corporate governance and
SOE governance. The author Hoang Van Hai (2018) has a corporate
governance project, based on the research related to institutions, policies
and laws to guide, operate and control the company and the public.
1.1.2.2. Group of research works on management innovation and

raising the Competitive capability of SOEs
The book of Corporate Governance Management, Listed for
Enterprises and Investors (Le Minh Toan, 2010) provides the most


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general overview of corporate governance, listed in Vietnam based on
the current situation of Large joint stock companies in Vietnam.
1.1.2.3. Group of research works on international experience
Some researches on international experience on management and
investment of state capital in enterprises, such as the law governing the
model of state capital owner according to international experience.
1.1.3. Assess the research situation
As mentioned above, domestic and foreign researches and articles
have analyzed in various perspectives on corporate governance, SOE
governance, corporate governance innovation and competencies.
competition of State-owned enterprises.
1.1.3.1. The issues have been clarified
- Researches have also inherited and clarified corporate
governance, business administration - but the key to the success of the
company. The works have also analyzed to clarify the concept of SOEs,
the characteristics and role of SOEs and on the operation of SOEs;
- There have been certain analyzes on the effectiveness, efficiency
assessment of the current SOEs, the governance system and SOE
governance innovation and on the competitive capability of SOEs;
- There have been many analyzes on the specific contents of SOE
governance activities such as remuneration, information transparency,
the assurance of shareholders' interests, the structure of the board of
directors.

1.1.3.2. Research gaps


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There has not been any comprehensive research on management
innovation in order to improve the competitive capability of SOEs in
Vietnam. PhD candidate aims at deepening the theory of SOE
governance, clarifying management activities and the competitive
capability of Vietnamese SOEs (100% State capital) in the context of
integration, thereby, providing recommendations.
1.2. Theoretical basis, research questions, research hypotheses
and approach of the topic
1.2.1. Theoretical basis
The theoretical basis of the thesis is based on three research
pillars: i) Theories of corporate governance associated with business
administration as well as the impact of corporate governance on
business strategy of the business; ii) theoretical views on SOEs, SOE
operations and iii) the influence of SOE governance on SOE competitive
capability in the context of strong competition in the market economy.
1.2.2. Research questions
In order to achieve the research objectives set out and on the basis
of analyzing the research situation of issues related to the content, the
author identifies a number of basic research questions that underlie the
research and solving objectives of the thesis. Those questions are:
Question 1: What are the nature and basic characteristics of
corporate governance, governance practices in SOEs and inadequacies
in SOE management practices in recent years?
Question 2: Why should SOE governance reform and the impact
of SOE governance innovation on SOs competitive capability? What do

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SOEs need to do to renovate governance towards improving the
competitive capability and increasing the efficiency in their operations?
Question 3: Are there any solutions to renovate governance to
improve the competitive capability for SOEs in the context of Vietnam's
typical market economy and international integration?
1.2.3. Research hypotheses
- The first research hypothesis: SOE governance has many
differences compared to other corporate governance. Stemming from the
role and characteristics of SOEs, SOE governance is more complex than
governance at other types of enterprises.
- The second research hypothesis: from the deep integration into
the global economic system (accession to the WTO, new generation
FTAs), the regulations on SOE governance of Vietnam must be changed
in accordance with the law in the WTO, create equal competition of
SOEs with private sector enterprises in the economy.
- The third research hypothesis: Inadequacies in the provisions of
the law on SOE governance and the poor awareness of SOEs on
governance activities, weak compliance is the main reason leading to
SOE Competitive capability is still limited.
- The fourth research hypothesis: SOE governance reforms
towards efficiency will help Vietnamese SOEs avoid business
weaknesses and improve competitive capability in domestic and
international markets.
1.2.4. Research approach of the thesis

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The dissertation's topic is in Business Administration, so the
approach is to study corporate governance in combination with business
administration, based on that propose SOE innovation and innovation to
improve the competitive capability and performance of SOEs.
CHAPTER II. THEORETICAL ISSUES ON THE MANAGEMENT OF
STATE ONWED ENTERPRISES AND COMPETITIVE CAPACITY
OF STATE OWNED ENTERPRISES

2.1. Conceptualizing on SOEs and SOE governance
2.1.1. Overview of state-owned enterprises
2.1.1.1. State enterprise concept
SOE is a type of enterprise whereby the state invests capital or
controls to perform economic functions and objectives set by the State.
Basically, SOEs are expanded by the State with at least the majority of
capital (over 50%) of the total contributed capital of the enterprises and
accordingly the State is the owner with the right to dominate the
enterprises. SOEs are not a concept that only appear in countries with
transition economies but exist in most countries in the world.
2.1.1.2. Characteristics of state-owned enterprises
In the economy, SOEs are also a type of enterprise, so they bring
all the characteristics of the enterprise in general, such as an
organization with its own name, assets, transaction offices, established
in accordance with the law.
2.1.1.3. The role of state-owned enterprises
SOEs play an important role in the economy in particular and in
the society. SOEs play a multifaceted role with many goals both

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economically, politically and socially as well as other development
orientations.
2.1.2. Overview of corporate governance
2.1.2.1. Corporate governance concept
Basically, governance is concerned with the process of planning,
organizing, leading and monitoring the activities of its members, using
resources to achieve success in the set goals.
2.1.2.2. Characteristics of corporate governance
Governance is the necessary process of activities carried out when
people work together in organizations aiming at certain goals.
2.1.2.3. Principles of corporate governance
Corporate governance is the operation of a system of rules,
internal processes and the implementation of such content to guide,
operate and control the company, in relation to the relationships between
the Board of Directors. Director, Board of Directors / Members' Council
and shareholders of a company with related parties.
2.1.3. State owned business governance
2.1.3.1. State owned enterprise governance concept
Corporate governance is a big category, can approach CG in many
different angles such as: management purpose, management mechanism
or through governance entities.
2.1.3.2. State owned enterprise governance characteristics
Legally,

SOEs

operate

like

a

normal

business,

taking

responsibility for all their activities in the production and business
process.


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2.1.3.3. Content of state owned enterprise governance
In Vietnam, according to the new regulations, SOE is legally a
state-owned enterprise and exists as a one-member limited liability
company. Therefore, SOE governance is mainly based on the principles
of corporate governance (rather than public companies).
2.2. Corporate governance innovation
2.2.1. Concept
Management innovation including innovation of business
management and administration is the path to success and sustainable
development of enterprises. Management innovation is also attached and
towards good governance, whereby a competent, timely, comprehensive
and transparent management system is implemented in an organization.
2.2.2. Content of corporate governance innovation
In the face of unpredictable changes in the business environment

and competition, innovation of business management thinking must be
considered as a vital line of business, especially for large enterprises and
public enterprises.
2.3. Issues of competitive capability of state-owned enterprises
2.3.1. The concept of the competitive capability of SOEs
Competitive capability of SOEs is their ability to maintain and
improve their competitive advantages in production and consumption of
products, expanding markets, attracting and using effectively factors of
production (capital, energy, labor, technology) to achieve high economic
benefits

(maximize

development of SOEs.

profits)

and

ensure

sustainable

economic


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2.3.2. Criteria for assessing the competitive capability of stateowned enterprises
General competitive capability of businesses in the market

economy is the core factor to survive. This factor especially plays an
important role in the complete market economy conditions, international
economic integration, businesses will have to compete to survive in the
market with international elements and increasingly fierce. When
competing equally, SOEs will also have to improve the Competitive
capability to maintain their existence. At the same time, the competitive
competence of SOEs must also rely on the same evaluation criteria as
private sector enterprises.
2.4. The effect of governance innovation on SOE competitive
capability
Corporate governance plays a special role in maintaining
efficiency, sustainable development and thereby maintaining the
competitive capability of your business. In this relationship, in order to
improve competitive capability, management activities need to be
renewed

in

the

following

contents:

management

capacity,

administration, improving the quality of human resources, improving
product quality to meet Market demand, compliance, businesses also

need to have appropriate production strategies to take advantage of
production and business opportunities. The Board of Directors, Board of
Members, and Board of Directors need to be identified as the nucleus of
the innovation and creativity process in all aspects of governance to
improve the competitive competence of the enterprise.


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CHAPTER 3. THE CURRENT SITUATION OF STATE ENTERPRISE
GOVERNANCE IN VIETNAM AND EXPERIENCE LESSONS FROM
SOME COUNTRIES

3.1. Overview of production and business activities of SOEs in
Vietnam
3.1.1. The process of formation and development of SOEs
In addition to SOE innovation and development, the policy of
building large-scale economic corporations and groups and holding a
leading position in a number of important industries and fields is
determined by Government.
3.1.2. Some production and business results
According to data from the National Enterprise Registration
Database (Ministry of Planning and Investment), as of December 31,
2018, the whole country had 714,755 operating enterprises, an increase
of 9.2% compared to the same period in 2017. The total number of
operating enterprises having production and business results (business
and production) surveyed and updated on December 31, 2017 on the
whole scale, there are 560,417 enterprises, an increase of 11% compared
to December 31, 2016 (MPI 2019, p. 26).
3.2. Actual state of SOE governance innovation

3.2.1. On corporate governance innovation
The transformation of SOEs to operate under a market mechanism
and in a legal framework equal to those of other economic sectors is a
consistent policy of the State.
3.2.2. Some governance strategies affect the competitive
competence of SOEs


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When assessing the effectiveness of strategic governance in SOEs,
the survey results show indicators on the professional qualifications of
strategy developers, coordination of management levels, and strategy
implementation, the level of supervision and handling of arising
problems are assessed at a fairly high level with an average score of 4
points or more on a 5-point scale.
3.3. Evaluate the impact of corporate governance innovation on
the competitive competence of SOEs
Changes in SOE governance to aim at are improving the
competitive capability, business efficiency, and profitability in both
short, medium and long term; compliance, meeting environmental,
social and sustainable development requirements. New and popular
strategic trends in the world are of interest to corporate executives,
including in SOEs.
3.3. Assess the impact of corporate governance innovation on
the SO's Competitive capability
Changes in SOE governance to aim at are improving the
competitive capability, business efficiency, and profitability in both
short, medium and long term; compliance, meeting environmental,
social and sustainable development requirements. New and popular

strategic trends in the world are of interest to corporate executives,
including in SOEs.
3.4. Experience of management innovation to improve the
competitive capability of SOEs in some countries around the world
3.4.1. Experience of China
3.4.1.1. Securing the basis for an effective governance framework
3.4.1.3. Responsibilities of the board of directors


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The Chinese government has realized that good corporate
governance is necessary to improve the competitive capability of the
company and attract international capital (Hong Kong Economic
Journal, 2001).
3.4.2. Experience of Korea
3.4.2.1. Securing the basis for an effective governance framework
3.4.2.2. Information disclosure and transparency
3.4.2.3. Related parties and unusual transactions
3.4.2.4. Responsibilities of the board
SOE governance has been mentioned in South Korea since the
Asian financial crisis in 1997. A series of reform measures were
introduced after the collapse of more than one-third of SOEs in Korea.
Quoc because of weak corporate governance.
3.4.3. Experience of Singapore
3.4.3.1. Temasek State Capital Investment Corporation
3.4.3.2. Changes in organizational structure
3.4.3.3. Changes in management
3.4.3.4. Changes to information disclosure
In Singapore, state-owned enterprises (SOEs) are called

government-linked companies (GLCs) .GLCs are partly or wholly
owned through Temasek, State Capital Investment Corporation (SWF Sovereign Wealth Fund), so they are also called TLCs (Temasek-linked
companies).
3.4.4. Lessons learned for Vietnam
3.4.4.1. A solid legal framework is a prerequisite to improving the
governance of state enterprises
3.4.4.2. Public and transparent information about the business


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3.4.4.3. Improve the professionalism of the board of directors/
board of members.
3.4.4.4. About SOE management agencies
Through studying the experiences of some countries as above, it
can be seen that many models of state property management and
supervision, in which, some countries have many similarities in the
environment and economic institutions that Vietnam can consult as well
as learn from experience. China has built a centralized model of state
asset management through the establishment of a system of State Asset
Management and Supervision Commission (SASAC) at both the central
and local levels. In Vietnam, it is very necessary to continue to consider
and perfect the management model and functions of the Committee
above.


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CHAPTER IV. VIEWPOINTS, OBJECTIVES AND SOLUTION
FOR MANAGEMENT INNOVATION TO IMPROVE THE

COMPETITIVE CAPABILITY CAPACITY OF STATE OWNED
ENTERPRISES
4.1. Viewpoints on innovation and improvement of governance
of Vietnamese SOEs
The Government has implemented many measures to arrange and
renovate SOEs and has achieved some positive results. The restructuring
of SOEs was promoted, the number of SOEs was narrowed, focusing on
key industries and fields. The operational mechanism of SOEs has been
renovated in the direction of business autonomy, fair competition, more
openness and transparency.
4.2. Indicators of competitive capability of SOEs should be
directed
4.2.1. Targets of growth
The average growth rate in the period of 2010 - 2015 of the SOE
sector was lower than that of the private sector, not commensurate with
the State resources invested and advantages compared to other economic
sectors.
4.2.2. Targets of market share and ability to dominate the market
Market share is the market share that enterprises have occupied;
In other words, this is the market segmentation of enterprises to
competitors in the industry), banks, telecommunications.
4.2.3. Targets of profitability
4.2.4. Targets of capital


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4.2.5. Targets of science and technology level
4.2.6. Targets of human resource
4.2.7. Targets of on production strategy, distribution and product

development
4.3. Management innovation solutions to improve the
competitive capability of state-owned enterprises
4.3.1. Governance reform is associated with the policy of
restructuring State enterprises
Since SOE governance is heavily influenced by SOE management
policies, a change in SOE rearrangement policy will have a great impact
on this corporate governance system.
4.3.2. Improve the professionalism and operational efficiency of
the Board of Members
In order to properly exercise their authority, the Board of
Members of SOEs requires members to behave for the common interests
of the enterprise, without conflicts of interest when performing their
assigned functions, with sufficient experience and appropriate expertise,
including experience in the private sector.
4.3.3. Strengthening the capacity of the contingent of state
enterprise administration
To perform well the governance functions, SOEs strengthen
training and training to gradually improve the governance capacity and
quality of the management team to meet the requirements of corporate
governance in the market mechanism and current extensive international
integration.


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4.3.1. Raising awareness about the policy of organizing and
renovating state-owned enterprises' administration
The arrangement and innovation of SOE governance is a big
policy, and it is also a very sensitive and complex field because it

changes a habit and a management mentality in a long time of the
mechanism.
4.3.2. Improve the professionalism and operational efficiency of
the Board of Directors
In order to properly exercise its authority, the Board of Directors
of SOEs requires its members to behave for the common good of the
enterprise, without conflicts of interest in the performance of their
assigned duties, with appropriate experience and expertise. including
experience in the private sector.
4.3.3. Strengthening the capacity of state management enterprises
In order to perform well the management functions, the SOEs
enhance their training and fostering to gradually improve the
management capacity and quality of the management team to meet the
requirements of business administration in the market mechanism and
extensive international integration today.
4.3.4. Separate ownership and administrative rights of SOEs
SOE governance is only truly radical and effective when there is a
separation between state management and SOE governance, and state
capital trading; between administrative management and business
management.
4.3.5. Improve the efficiency of business administration


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Financial management is one of the key aspects of corporate
governance in general to improve the competitive capability of
businesses. At present, financial management is the most difficult issue
in SOEs due to many outstanding debts and bad debts.
4.3.6. Improve the publicity and transparency in SOE governance

activities
SOEs need to improve the quality of information, and the figures
must reflect the actual financial situation and production and business
activities of the enterprises.
4.3.7. Strengthen the application of modern international
standards on corporate governance
In order to improve competitive capability in the domestic and
international market, the innovation of governance in thinking as well as
strategy and management capacity is close to the principles and
standards of corporate governance.
4.4. Recommendations for state management agencies supervision of compliance with the law on SOE governance
The competent authorities continue to direct the strict handling of
violations in the management and use of state capital and assets in
SOEs, direct the ministries and branches to implement the conclusions
of the Government Inspectorate. and State Audit.