Both in the immediate future and in the long term, Vietnam's state-owned enterprises (SOEs) will still play an extremely important role — and hold key positions — in various sectors of the national economy. However, the recent shift of the centrally planned economic system, towards a market-oriented economy under state control, has exerted a marked impact on the need to restructure the state sector, and there is an urgent need to improve the efficiency of these SOEs. Therefore, the main topic of this chapter is a study of the present status of SOE restructuring, as part of Vietnam's aim of advancing towards industrialization and modernization, and will address two key issues. First, an analysis of the present state of Vietnam's SOEs: by size, sectoral profile, and management and ownership structures. Based on this analysis, an evaluation of SOE efficiency can be made, from which we can have a sound basis to understand the process of restructuring Vietnam's SOEs. Secondly, the chapter will advance views on the orientations needed to restructure the SOEs, to achieve the aim of industrializing and modernizing Vietnam.
Current State of SOEs in Vietnam
The current system of SOEs in Vietnam was formulated both through a process of industrialization and through the establishment of new SOEs, of which the latter was more important. A series of SOEs, spanning various sectors — run either by national ministries and general departments, or by provincial authorities — was set up in North Vietnam between 1960 and 1970, and this policy was initiated across the entire country after 1975. Since the late 1980s, however, a process of reforming and reducing the cumulative number of SOEs has been under way. By the end of 1989, there were 12,297 SOEs in operation in Vietnam, with a total capital value of 34,216 billion dong. Over the last three years, under the market mechanism, the country's SOEs have been revamped and re-registered under government decree No. 388/CP. And by June 1993, the total number of SOEs had dropped to 7,060, with a total capital value of 44,965 billion dong. Between June 1993 and April 1994, SOEs continued to be reformed, and the cumulative number of SOEs reduced further, to 6,264, with a total capital of 53,150 billion dong (approximately US$5 billion).