In order to effectively fulfil their role as the core and pioneering force in labour and production to develop the economy in combination with national defence in the new period, military enterprises have comprehensively and synchronously implemented measures to create a breakthrough in the innovation of organisational and operational models. Among these, researching and proposing measures to enhance the management efficiency of enterprises is one of the fundamental and urgent issues.

Corporate governance is a broad concept that encompasses all leadership, direction, management, operations, and production conducted by the governing entity (which includes the supervisory agency, leader, and business owner) across various fields to achieve goals set by the enterprises. This aspect, which is of paramount importance, directly enhances production capacity, fosters creativity, improves operational efficiency, and determines an enterprise's survival and sustainable development. For military enterprises, due to the unique nature and high-specificity requirements of their tasks, corporate governance holds an even more significant position, ensuring the effective implementation of the “dual objectives” of both economic efficiency and the assurance of national defence and security.

In recent years, under the leadership and direction of the Central Military Commission and the Ministry of National Defence, the party committees and commanders at all levels, corporate governance within military enterprises has made significant progress, achieving commendable results. The system of regulations governing leadership, direction, management, decentralisation, and delegation of authority has been supplemented and perfected. Many existing issues, inadequacies, and “bottlenecks” in the management and governance of enterprises have been resolved. Military enterprises have actively applied scientific and technological in governance, particularly in the management of human resources, finances, investments, and project management. Several enterprises have pioneered the development and effective implementation of modern governance models. Thanks to these innovations and improvements in governance efficiency, despite facing numerous difficulties and challenges, such as the Covid-19 pandemic, global economic downturn, trade wars, and military conflicts that disrupted supply chains, most military enterprises have proactively adapted, maintained stability, and experienced significant growth, with each year’s growth rate exceeding the previous year’s. The integration of economic activities with national defence has become increasingly close and effective, contributing to social welfare, poverty alleviation, and population stabilisation. This, in turn, has affirmed the position of military enterprises in the overall development of the country, making them a crucial force for the State in regulating and stabilising the macro economy, promoting socio-economic development, and ensuring national defence and security, especially in strategic areas such as borders, seas, islands, and remote regions.

Conference on corporate governance for Military enterprises held in 2022 (Photo: qdnd.vn)

Despite the achievements, certain limitations in the governance of several military enterprises are evident in the level of proficiency in strategic direction and the process of directing, commanding, and managing production and business activities. The development of high-quality human resources and the innovation of technology have been slow and are not on par with the potential of these enterprises. Furthermore, financial management, monitoring, and supervision activities have shown lack of comprehensiveness, specificity, and high efficiency. The primary causes of these limitations stem from unclear governance policies and mechanisms, which lack synchronisation and do not align with the unique nature of combining economic activities with national defence and security. Additionally, certain enterprise managers still harbour the mindset of dependency, complacency, and resistance to change, which hinders their adaptation and ability to keep pace with development requirements. Meanwhile, the restructuring, innovation, and enhancement of the operational efficiency of military enterprises have become pressing issues, with very high requirements to meet the demands of building an “elite, compact, and strong” Army that advances towards modernity and the cause of industrialisation and modernisation in the context of integration, globalisation, and the growing trends of digital, green, circular, and shared economies. Therefore, alongside accelerating the restructuring process, military enterprises need to decisively and comprehensively implement innovative measures to enhance corporate governance efficiency, thus creating an environment and motivation for development. Within the scope of this article, we propose the key measures as follows:

First, strengthening the leadership and direction of party committees and promoting the role of commanders and management officers at all levels in innovating and enhancing the efficiency of corporate governance within military enterprises. The supervisory units and military enterprises, particularly the party committees, leadership boards, boards of directors, and members’ councils, must correctly understand the crucial position and role of governance in the survival and development of enterprises. This understanding is vital for ensuring the successful implementation of the tasks of restructuring, innovating, and enhancing the operational efficiency of state-owned enterprises within the military, as outlined in Prime Minister’s Decision No. 66/QĐ-TTg dated 06 June 2024, approving the plan for restructuring military enterprises for the 2021 - 2025 period, and Conclusion No. 1815-KL/QUTW, dated 03 March 2023, by the Central Military Commission on continuing the implementation of Resolution No. 425-NQ/QUTW, dated 18 May 2017, on restructuring, innovating, and enhancing the operational efficiency of military enterprises until 2020 and beyond. Therefore, it is necessary to clearly define the guidelines, objectives, plans, timelines, and measures for modernising corporate governance in accordance with the State’s laws on economics and finance, the specific characteristics of the military, and the national digital transformation process and e-Government within the Ministry of National Defence. 

Second, actively implementing and operating modern corporate governance models per the Ministry of National Defence’s regulations and international principles and practices. Following the direction of the Ministry of National Defence, military enterprises have progressively adopted and implemented a unified model of corporate governance where the roles of the Chairman and the General Director (or Director) are distinct. In this model, the Company’s Chairman acts as the direct representative of the enterprise’s ownership, while the General Director (or Director) is responsible for managing production and business activities. This distinction allows leaders to fully execute their responsibilities in overseeing, supervising, directing, and managing the enterprise. However, in practice, the distinction of responsibilities between the Chairman and the General Director in some enterprises remains unclear and inadequately defined, leading to confusion during implementation. Hence, in the near future, military units and enterprises must actively research, learn, and flexibly apply modern governance models in line with international practices to integrate them into their production and business operations. A particular emphasis should be placed on adopting the governance principles of the Organisation for Economic Cooperation and Development (OECD), which provides a foundation for effective corporate governance frameworks and ensures transparency, fairness, and accountability regarding the rights of all stakeholders involved in military enterprises. Additionally, it is crucial to actively apply modern science, technology, and management tools in corporate governance, such as the systems of human resources management, production planning management, business management, investment project management, and financial and accounting management. Military enterprises should also review and refine their internal governance regulations, including financial management regulations and labour and wage management. Besides, they should explore and establish modern processes for developing strategic plans, investment plans, and production and business plans that align with the current physical and intellectual capabilities of the enterprise. Furthermore, they should continuously innovate and improve the management of human resources and organise training for workers while providing them with policies and incentives. 

Third, continuing reviewing and refining the system of legal documents on state management of military enterprises. In recent years, following the resolutions, directives, and guidelines of the Party and the Government regarding the integration of economic activities with national defence and security, and vice versa, the Central Military Commission, the Ministry of National Defence, and relevant agencies have issued a comprehensive, synchronised, and unified system of guidelines on state management of military enterprises, providing a crucial foundation for enterprises to implement these policies. However, the process of restructuring, equitisation, divesting state capital, and merging enterprises still faces numerous challenges and obstacles due to inconsistencies in general regulations, internal regulations, and certain guidance documents that lack specificity, detail, and clarity. Therefore, to meet the requirements of tasks in the new situation, it is essential for the relevant agencies to actively review, research, and advise competent authorities on supplementing and refining the guidelines and regulations on managing and restructuring enterprises, aiming to resolve difficulties and obstacles in the execution of these tasks by military enterprises. The focus should be on researching and proposing new regulations concerning the management of business activities, the management of state capital in enterprises, especially the organisation and management of enterprises directly serving national defence and security, and those that combine economic activities with national defence. Through this, the mechanisms and policies for managing enterprises under the Ministry of National Defence will be refined, thus ensuring the effective execution of the Ministry's state management function and its role as the representative body of state ownership in enterprises where the State holds 100% of the charter capital and in other enterprises with state investment. Additionally, functional agencies should study, advise, and propose measures and policies to support the sustainable development of military enterprises.

Fourth, enhancing the efficiency of financial inspection and supervision in military enterprises. The primary objective is to strictly adhere to the regulations and guidelines on financial management as directed by the Ministry of National Defence under the Financial Management Reform Plan. Military enterprises must strengthen self-inspection efforts regarding implementing leadership regulations by party committees on financial matters and financial transparency regulations and promote the emulation movement of "Units with excellent financial management". This includes urging and supervising units to fulfil their obligations of payment, disbursement, and annual budget settlement, ensuring the allocation and public disclosure of budget estimates as determined by the Ministry of National Defence. Enterprises should actively coordinate with the Ministry of National Defence to report and approve pricing plans for defence products funded by various budgets, recover and settle debts, reduce outstanding debt balances, and minimise the occurrence of bad debts. Additionally, they should allocate financial reserves by regulations. Immediate corrective actions should be taken to address any issues in managing public finances and assets within the unit, expedite the disbursement progress of investment projects, and thoroughly resolve any slow-moving financial backlogs. It is also crucial to strictly comply with legal regulations on managing and using state capital invested in production and business activities within military enterprises.

In addition, enterprises must make breakthroughs in research and the development of science and technology, aiming to turn certain technological fields into spearheads of national industry. They should also leverage their autonomy and responsibility in financial management, maintaining flexibility in production and business activities to enhance the efficiency of corporate governance within military enterprises in the new situation.

Senior Colonel, Dr. PHAN THI HOAI VAN, Deputy Chief of Staff of General Department of Defence Industry