Strengthening Corporate Governance of Vietnamese SOEs

With reference to Chinese and Korean experience

Abstract

State-owned enterprises (SOEs), particularly large corporations and economic groups, play a core role in the Vietnamese economy. Thus, their corporate governance is likely to exert a substantial impact on the efficiency and competitiveness of the whole economy. In this paper, we review the past reform efforts and current state of corporate governance at Vietnamese SOEs and identify key challenges they face. In doing so, we make a reference to the OECD Guidelines on Corporate Governance of SOEs, and make a comparison with the evolution of corporate governance at Chinese and Korean SOEs. We note that Vietnamese SOEs have a long way to go for improving their corporate governance. Line ministries are advised to phase out their role of exercising state ownership rights by dominating the SOE boards of directors. Separate accounting is needed for sociopolitically motivated services provided by SOEs, which is a prerequisite for better evaluation of CEO performance and holding them more accountable. Recent push for better transparency and disclosure at SOEs should be kept on. And, high priority should be given to strengthening board independence and professionalism at both SOEs and equitized, exchange-listed enterprises.