To learn more about the role of military-run enterprises in Vietnam’s economic development, Vietnam Business Forum interviewed Colonel Pham Viet Thich, Deputy Director of the Economic Department under the Ministry of National Defence. Anh Son reports.
Could you tell us some outstanding business results of military-run enterprises in 2013?
Vietnam’s macro-economy was gradually stabilised in 2013. Growth and production had positive development towards the end of the year. However, growth remained low; budget balance was a challenge; and businesses still faced difficulty. In this context, under the leadership and direction of the Central Military Commission, the Ministry of National Defence, and relevant authorities, military-run enterprises still managed to maintain relatively stable growth rate, ensure employment for labourers, fulfil their obligations to the State Budget, and significantly contribute to national economic growth.
In 2013, military enterprises were forecast to make gross revenue of VND251,170 billion (up 11.6 percent over 2012), profit of VND39,900 billion (up 28.7 percent), and tax payment to the State Budget of VND18,100 billion (up 9.5 percent). Payrolls increased 9.2 percent against 2012.
A leading light of military enterprises is the Military Telecom Group (Viettel) with impressive development steps of a leading telecom firm in Vietnam and in the international market. Now, Viettel outstripped the Vietnam Posts and Telecommunications Group (VNPT) in both scale and business performance. In 2013, Viettel’s revenue was estimated to rise 39.54 percent year on year to VND160 trillion, while net profit was forecast to soar 27.3 percent.
Saigon Newport Corporation (SNP) is a leading port operator in Vietnam, although it is faced with fierce competitive pressures. The corporation accounts for 65.54 percent of market share in Ho Chi Minh City and 42.87 percent in the country. Cat Lai terminal ranks 34th in the world in cargo throughput.
In 2013, many joint stock companies, formed from the equitisation of military-run enterprises, actually affirmed their roles and positions in the market. Typical examples include Joint Stock Company 32 under the General Logistics Department, Ha Do Group Joint Stock Company under the Institute of Military Science and Technology, Phu Tai Joint Stock Company under the Military Zone 5, Garment Joint Stock Company No. 20 under the General Logistics Department, and Garment Joint Stock Company No. 19 under the Vietnam People’s Air Force. Specially, by promoting its achievements in the previous years, Military Commercial Joint Stock Bank (MB) has now become one of three best-performing joint stock banks in Vietnam. In 2013, the lender expected to increase its share capital to VND15 trillion, earn profit before tax of VND3,523 billion and control bad debts to allowable levels.
Military enterprises have made very positive contributions to the national economy. What factors are behind this success?
It is believed that military-run enterprises make huge revenue and profit because they can employ free labour from soldiers. However, that is not true because military-run enterprises are equal to others under the Law on Enterprises. And, in my opinion, the factors behind military enterprises’ success are right strategies, market-conscious plans, steely discipline and good human resources. These are the precious traditions and virtues of Vietnam People’s Army.
For example, Viettel is now one of the biggest telecommunications firms in Vietnam. Viettel has worked out right directions, sought out stability amid rapid change and adaptation, strictly followed steely discipline and operated with military order. These are considered core values that create the might of the group today.
Or MB firmly sticks to its motto: Changing to take the lead, create difference and sustainability with culture, discipline, expert and devoted staff, and scientific organisation. These are the basic elements for MB to become one of the three best-operating joint stock banks in Vietnam.
From its three strongly-built foundations, namely “Top-quality customer-oriented service; advanced management and professional human resources; and military discipline, corporate culture and community responsibility,” Saigon Newport Corporation has continuously maintained sustainable development to become a modern professional port operator and logistics company model in Vietnam.
Moreover, military-run enterprises always link business development to boosting the image of Uncle Ho’s warriors, and relate corporate benefits to social responsibility. They are always the vanguards to remote and poor areas to contribute to the social development, improve social security in their operating areas, and maintain political security, social order and safety in strategic areas.
How do you assess opportunities, challenges and solutions for Vietnamese military-run enterprises to integrate successfully and develop sustainably in the current tough time?
By the end of 2013, military enterprises had basically adjusted their structure, form and scale of operation based on key fields. That reorganisation and innovation has actually enhanced management efficiency of owners, created conditions to liberate productive forces to develop businesses and assert their positions in the country’s development.
However, in 2014, military-run companies are forecast to continue to face with difficulties in production and business operations due to objective and subjective causes, as well as many other shortcomings. Besides, the operating efficiency of military-run enterprises is not the same and their corporate restructures are unreasonable. Many subsidiary companies of effective holding companies are ineffective. Their management organisation models are not consistent and external investment lacks well-designed planning. Many companies lack production and business development strategies and proper investment for advanced science and technology for production and business activities.
Before the above advantages and difficulties, to have successful integration and sustainable development, I think military enterprises need to focus on immediate solutions, as follows:
- Focusing on strategy building and restructuring of military enterprises in accordance with the Prime Minister’s Decision 929/QD-TTg dated July 17, 2012, reviewing business lines, reorganising operations to facilitate supporting businesses and strengthen core businesses.
- Improving governance and use of capital and assets, focusing investment funds for core businesses, effectively using investment capital, mobilising, managing and using capital in according with the laws.
- Using accrued capital for production and business activities, mobilising financial resources from partners, economic and financial the organisations, enhancing capital preservation and development, borrowing loans in accordance with the law.
- Perfecting governance and regulations, focusing on core business scopes, training and developing human resources, recruiting talent executives.
- Improving accounting quality and applying statistical accounting regime.
- Closely managing debts, timely recovering due debts, timely dealing with outstanding debts and operating losses, ensuring liquidity, gradually enhancing the financial health of loss-making enterprises.
- Promoting the role and responsibility of board members, presidents, executives, controllers, auditors, internal controllers.
- Promptly reporting difficulties and problems concerning management organisation and mechanism to higher authorities to perfect policies and regulations, ensuring business autonomy, improve business efficiency and competitiveness.
- Strengthening cooperation of military enterprises to enhance their financial capacity and competitiveness for mutual development.
In 2014, the risk-prone world economy is forecast to adversely impact the domestic economy and military businesses thus need to be more dynamic, update and process information faster, and utilise resources allocated by the State and the Ministry of National Defence more effectively to fortify the role of the armed force in protecting and developing the national economy.
Đăng ký: VietNam News
