State-Owned Enterprises in Vietnam: A Brief Overview
SOEs, as the name suggests, refer to a corporate form where the state has some ownership of the business entity. Despite Western corporate law scholars' prediction of an ‘end of history' for state-oriented corporate governance,[972] SOEs remain an ever-thriving force in today's global economy, accounting for half of the world's total gross domestic product (GDP) and as much as 40 per cent of global output.[973] In socialist systems such as Vietnam, state ownership and control is only the beginning of what defines the propelling force of SOEs.[974] While the neoliberal conception of corporate law often focuses its unit of analysis on the individual corporation,[975] scholars of state capitalism have long argued for a broader horizon, that is, the ecosystem within which SOEs operate, as the true measure of statemarket relations and their power dynamics.[976] In exploring the discourse around SOEs in Vietnam's latest constitutional-making round in 2013, this chapter follows the same wisdom, spotlighting the ecosystems that drive the SOE governance framework in Vietnam.
Broadly speaking, in Vietnam, where the political ideology of socialism entwines with a history of centrally managed economy, SOEs have longed played a salient role. Originally constructed based on the centralised model of the former Soviet Union, Vietnamese SOEs were generally under the direct management of line ministries or local governments, primarily tasked with executing five-year economic plans.[977] The 1986 Renovation (Doi Moi) era ushered in a revamp of the SOE structures, notably the ‘general corporation' model (tong cong ty), whereby SOEs in key industries were merged to form large-scale corporate groups.[978] When such a model did not prove successful, Vietnamese planners forged ahead with a number of experimentations, including converting these general corporations into joint stock companies, establishing parent-subsidiary structures, as well as creating specialised holding institutions.[979] As further explored below, these numerous structures have evolved into a modern ecosystem of capital linkages in which modern Vietnamese SOEs operate.
According to recent statistics, Vietnamese SOEs remain large-scale and are concentrated in crucial sectors such as electricity, minerals, petroleum, finance, and telecommunications.[980] They accounted for only 0.4 per cent of the total number of registered companies, but contributed to over one-third of the country's GDP, half of its export, and the majority of its tax revenue.[981] SOEs thus undeniably remain a core pillar of the Vietnamese economy.In light of their dominant economic roles, unsurprisingly, SOE reforms became a key issue during the 2013 constitution-making round, intimately connected to debates around the roles of the Vietnam Communist Party (VCP) in the management of the economy, the roles of the private sector, and land ownership issues.[982] The next section explores SOEs as one driving cause of the constitutional-making process.
Before diving in further, it is worth clarifying the terminology. SOEs (doanh nghiep nhd ntific) under Vietnamese laws encompass not a monolithic corporate form but a number of ownership structures and legal arrangements. Most significant are ‘state economic groups' (tap dodn kinh te nhd ntific) (SEGs), which are consolidated, large-scale, and highly diversified conglomerates that resemble Japan's keiretsu, South Korea's chaebols, and China's economic groups.[983] First introduced in 1991 by then-Prime Minister Vo Van Kiet in the form of ‘state corporations’, the SEG business model was formally created in the 2001 Resolution of the Third Plenum of the 9th Party Central Committee, with the stated goal to ‘compete and integrate into the international economy’.[984] Today, modern SEGs such as the Vietnam National Petroleum Group, the Vietnam Chemical Corporation, and the Vietnam Rubber Group hold de facto monopoly in their respective markets.
Importantly, they are authorised to, and do, diversify into other so-called noncore industries, with significant presence in banking, securities, and real estate.[985] Once organised under line ministries and provincial governments, today's SEGs report directly to the Office of the Prime Minister through two institutional actors, the State Capital Investment Corporation (SCIC) (Tong cong ty dau tti vd kinh doanh von nhd ntidc) and, from 2018 on, the Committee for Management of State Capital (CMSC) (Uy ban Quan ly von nhd nUdc tai doanh nghiep).
These institutional actors and their significance as related to the constitutional implementation process are explored in section V below.While SEGs are the largest state-owned conglomerates, further down the spectrum are general corporations and smaller corporations owned by specific line ministries, or by provincial and local governments through each level's People's Committees. General corporations, once the hallmark of post-Doi Moi reforms in the 1990s, are still large-scale but do not have the same stature as economic groups.[986] Provincial-owned and local-owned SOEs tend to be smaller in size and can take on various business forms, including limited liability and shareholding companies, each with its own governance requirements.[987] For the purpose of this chapter, SOEs refer to the general structure of state ownership, with specific legal arrangements such as SEGs and general corporations identified as such where relevant.
III.