Cracks in the key pillar of the economy

Jul 9, 2010. The State sector, characterized by large conglomerates assuming important economic segments and always touted as the key pillar of the economy, faces a major setback when the giant shipbuilder Vinashin is found stranded in huge debts and is thrown a lifeline by the Government.

Mired in unimaginably tremendous financial arrears of as much as VND80 trillion, the group now undergoes an overhaul, as the Government has instructed that it hand over a dozen or so of its subsidiaries to two other State-owned groups. The soothing rather than painful restructuring exposes more questions than answers.

Many economists, whose opinions are widely covered on local media, doubt the measure, and call for the Government to bring out a radical solution to the State sector to prevent cracks from developing on the pillar. But cracks are there to be repaired.

Sai Gon Tiep Thi in a commentary says the Vinashin scandal has become “the most typical example of the State sector characterized by low business efficiency, imprudent investment, losses and reliance on privileges.” The journal remarks that many State-owned groups have failed to realize their mandates, from the basic one like ensuring business efficiency to the more political ones like assuming the predominant roles in their respective business segments. It cites several names in the list, including Electricity of Vietnam Group for failing to ensure sufficient power supply to Petrolimex for the poor performance in stabilizing oil products on the local market.

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