Viet Nam: SOE Reform and Corporate Governance Facilitation Program - Tranche 2

Public sector management / Reforms of state owned enterprises

Strategic Context and Policy Framework for SOE Reforms since 2009. SOE restructuring is a strategic goal of the 2011 -2015 Socio-Economic Development Plan. A number of key legislative and policy initiative (decrees, decisions and circulars) have been introduced and adopted to improve the governance, oversight and management of SOEs. Prime Minister's Decision (PM Decision) 929 of July 2012 provides the strategic direction for SOE reforms and sets a deadline for preparing restructuring plans and for initiating divestment of non-core investments. To support this effort, as of December 2013, about 60% of state economic groups and general corporations have had their restructuring plans approved. PM Decision (339/QDD-TTg) of 19 February 2013 also put restructuring of SOEs as one of three pillars of economic restructuring alongside banking sector restructuring and public spending restructuring to transform the economy and improve its competitiveness for the period 2013- 2020. As the lead agency for coordination and oversight of the restructuring process, the Ministry of Finance (MOF) has finalized the SOE Reform Roadmap which highlights the key roles of line ministries/owners and enterprises to facilitate an enabling environment and to undertake specific structural reforms. A comprehensive monitoring and evaluation framework that provides key performance indicators to monitor the overall progress of the restructuring and support performance management at individual SOE and line ministry/owner level is under finalization, and its implementation is likely to commence from the 3rd quarter of 2014.

ADB support. ADB's Country Partnership and Strategy 2012- 2015, and the Country Operational Business Plan 2012 -2014, underline SOE reform as central to its strategy for business development and private-sector-led employment growth. Within this framework, ADB has been supporting economic reforms and private sector developments through a number of programs focused on SOE restructuring, development of microfinance, SME development, and financial sector reforms. ADB has committed significant investments to the pilot restructuring of selected SOEs and is also providing capacity-building support to the management of pilot SOEs being restructured. Continuing support and sustained engagement in these sectors will be essential to continuing progress in the SOE sector.

Good progress achieved in corporate and financial restructuring of participating SOEs. These SOEs have been equitized.

The project was financially closed on 27 March 2018.

Debt restructuring implemented, combining financial and corporate restructuring

increased operational efficiency and improved corporate governance of general corporations and other SOEs.

1. Current ratio and debt-service coverage of participating SOEs have been improved; Participating SOEs have been equitized.

2. Participating SOEs have been restructured to focus on core-business; Line business have been reduced; Divestment from non-core business is on track; Positive progress has been made in strengthening corporate governance in areas of risk management, financial planning, budgetary controls, and IT infrastructure.