VINACHEM

“Why can state owned conglomerates’ chiefs still can receive sky high incomes,even though their enterprises repeatedly take loss?” was the question raised byDo Manh Hung, Deputy Chair of the Social Affairs Committee to the Prime MinisterNguyen Tan Dung.

In fact, this is the matter of concern of not only Hung, but of many otherpeople as well. The State Chief Auditor--Dinh Tien Dung, said before theNational Assembly that Petrolimex incurred the loss of VND1,423 billion, but thechief of the enterprise still received VND70 million a month in 2010 and
VND58 million in 2011.

Dung, in the replied document, citing the current regulations on the salariesand wages for management officers, said that most of the conglomerates havestrictly followed the regulations.

However, the Prime Minister admitted that some state owned enterprises (SOEs)defined the salaries and bonuses for the heads and their staffs not inaccordance with the current regulations. The Rubber Industry Group, PetroVietnam,the State Capital Investment Corporation (SCIC) have been named when mentioningthe violation of the principles.

Dung said that since the inspection by the State as the owner of enterprises hasnot been carried out regularly, which has led to the fact that the violationscould not be found soon.

In other cases, some state owned conglomerates took profit because they had tosell products at the prices below the cost prices as requested by the State inan effort to intervene in the market and to stabilize the prices. Theconglomerates include Petrolimex, the petroleum product distributor, and theElectricity of Vietnam (EVN).

Meanwhile, Dr. Le Dang Doanh, former Head of the Central Institute for EconomicManagement (CIEM), now a well-known independent economist, said the “high incomefor unprofitable enterprises’ managers” shows the loopholes of the laws relatingto the business management.

Doanh noted that there has been no legal regulation which says that if CEOs orPresidents will have to see their salaries lowered if they cannot fulfill thebusiness plans or take loss.

In other economies, according to Doanh, clear provisions are always set up inlabor contracts to clarify the responsibility and the right of CEOs. Themanagers of enterprises would be required to undertake some works and fulfillsome tasks during their terms, or they would be dismissed or receive lowersalaries.

Meanwhile, such a regulation does not exist in Vietnam. The decisions by theState to appoint personnel to the posts of CEOs or Chair of the Board ofDirectors do not clarify the interests the personnel would get and theresponsibility they have to take when their make profit or take loss.

“This is a weak spot in the state management work,” Doanh said.

Dr. Nguyen Minh Phong from the Hanoi Research Institute for the Socio-EconomicDevelopment, agreed, saying that this showed the shortcomings in the state’senterprise management.

He emphasized that in a market economy, the pays to individuals must depend ontheir labor results.

Phong has called on to reconsider the regulations on the appointment ofpersonnel to the important posts at state owned enterprises, especially biggeneral corporations.

“It’s necessary to stipulate that the saleries and bonuses to individuals dependon the enterprises’ business results and their ability,” Phong said.