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Thursday, October 19, 2017, 16:18 (GMT+7)
The restructuring and improved performance of military-run enterprises

The restructuring and improved performance of military-run enterprises is at the forefront of the Party and Government’s lines on reorganizing, renovating and improving the efficiency of state-owned enterprises (SOEs). As the centerpiece of the military’s political tasks, the restructuring and improved performance of military-run enterprises necessitates firm, strong leadership and command with a high degree of determination mirrored by synchronous measures.

With a profound sense of responsibility, over the past years, the Central Military Commission (hereinafter CMC) and the Ministry of National Defense (hereinafter MoD) have thoroughly grasped the Party and Government’s resolutions and directives concerning reorganizing, renovating and improving the efficiency of SOEs. This has effectuated strong leadership and command by the CMC and MoD over the restructuring and improved performance of military-run enterprises whereby initial positive results have been recorded.

A conference on reviewing equitization of military-run enterprises
in the 2002-2016 period (photo: ckt.gov.vn)

Since 2001, 5 projects aimed at restructuring military-run enterprises, which are designed by the MoD and submitted for the Prime Minister’s approval, have been undertaken. Accordingly, military-run enterprises have gradually reorganized and transformed their modes of organization and operations in line with the country’s socio-economic development strategy and their assigned military tasks. The number of 100% state-owned enterprises declined to 88 by the end of 2016 from 305 in 2000 while large-scale corporations and groups have been established operating in the fields of which the military have the advantage. In the wake of the restructuring, the majority of military-run enterprises have gained a foothold in the face of stiff competition in the market economy while adhering to the State’s laws and the MoD’s regulations. They have produced remarkable economic performance, little by little integrated into domestic and foreign markets, created hundreds of thousands of steady jobs and contributed more to the State budget. The effectiveness of combining economy with national defense and vice versa has been further enhanced as military-run enterprises have significantly contributed to enhancing military production capacity, stabilizing and developing the macro-economy, boosting national industrialization and modernization and ensuring social security. In the first half of 2017, military-run enterprises recorded an estimated total turnover of VND 189 trillion, generated an estimated pre-tax profit of VND 22 trillion and making a contribution of over VND 21 trillion to the State budget while their employees earned the average per capita income of VND 11.8 million per month.

Those aforementioned results suggest that the restructuring of military-run enterprises has basically achieved stated goals. Nevertheless, there remain shortcomings to be addressed. Vis-à-vis the restructuring and equitization of SOEs, poor awareness has still been witnessed among a segment of Party executive committees and commanders. This has led to their yet-to-be-strong leadership and manifestations of being renovation and equitization-shy. The restructuring has yet to match approved projects and fallen behind schedule somewhere or other. While the number of 100% State-owned enterprises under the MoD remains large, their structure is inappropriate. Being sluggishly responsive to the market mechanism, some of them have had low competiveness and produced poor business performance, which has yet to match their resources.  At the same time, a number of mechanisms and policies have not been completed and failed to keep up with reality concerning the restructuring, equitization and  management of military-run enterprises.

Currently, the Party and Government advocate stepping up the economic restructuring in associated with conversion of the growth model with the restructuring of SOEs being deemed a strategic breakthrough. Against this backdrop, the restructuring and improved performance of military-run enterprises continues to be accelerated in accordance with Resolution No. 425-NQ/QUTW by the CMC on “Reorganizing, renovating and improving the efficiency of military-run enterprises until 2020 and beyond” and Project on “Reorganizing, renovating and improving the efficiency of military-run enterprises in the 2016-2020 period” approved by the Prime Minister. It is essential that relevant units resolutely accelerate the equitization and divestment from enterprises whose operations have little to do with military tasks while enterprises with poor performance shall be dissolved in accordance with statutory regulations. This onerous task necessitates a high degree of across-the-board determination mirrored by synchronous measures as follows:

First, communication and political and ideological education work shall be promoted concerning the restructuring and improved performance of military-run enterprises. In the foreseeable future, military-run enterprises are slated for major transformations in organizational structure and operations. This directly affects mentality and life of a large number of cadres and employees from military-run enterprises. As a result, significance shall be attached to political and ideological education work so that awareness can be developed among Party executive committees, commanders, cadres and employees, especially those in enterprises subject to the restructuring, equitization, divestment or dissolution regarding lines and policies of the Party, State, CMC and MoD. This will help to effect a high degree of consensus and solidarity over the implementation of the task. For the sake of effectiveness, communication and political and ideological education work shall focus on clarifying the inevitability, goals and principles of the restructuring of military-run enterprises as well as relevant policies. The whole military, first and foremost Party executive committees, commanders, relevant units and enterprises, shall be fully aware that this is the centrepiece of the military’s political tasks until 2020 while it is at the forefront of the Party and Government’s lines on reorganizing, renovating and improving the efficiency of SOEs. It will facilitate military-run enterprises’ improved performance, thereby meeting the requirements of development and integration and more effectively fulfilling their functions and tasks in the new situation. At the same time, military-run enterprises shall be receptive to their employees’ opinions and opportunely deal with their legitimate requests in accordance with statutory regulations. Misleading allegations shall be resolutely refuted while negative practices, opportunism and formalism shall be averted.

Second, leadership and command shall be enhanced by Party executive committees, commanders at all levels over the restructuring and improved efficiency of military-run enterprises. This is a matter of paramount importance which enables the restructuring and improved efficiency of military-run enterprises to fare well on schedule. Accordingly, military-run enterprises subject to the restructuring shall thoroughly grasp resolutions, directives and projects by the Party, Government, CMC and MoD, especially the Resolution of the 12th Party Central Committee’s 5th plenum, Resolution No.425-NQ/QUTW and Project on “Reorganizing, renovating and improving the efficiency of military-run enterprises in the 2016-2020 period”. Military-run enterprises shall issue their own resolutions which map out timeline and road map concerning ideological, organizational and policy works in compliance with their functions and assigned tasks. Emphasis shall be placed on measures for strengthened organizational structure and use of finance, property and military-owned lands, on policies earmarked for employees, as well as post-restructuring measures. The restructuring process shall be open to regular inspection and supervision so that military-run enterprises’ military tasks and business operations are immune to disturbance and negative practices can be wiped  out. Functional agencies under the MoD, first and foremost the Department of Economic Affairs, shall closely cooperate with and strongly urge military-run enterprises to implement the restructuring, thereby opportunely pinpointing and reporting unforeseen problems to the MoD for viable solutions.

Third, organizational structure shall be strengthened while measures shall be taken for improving the performance of military-run enterprises. Grounded in the Project approved by the Prime Minister and MoD’s plans, military-run enterprises shall accelerate the restructuring in line with their military tasks and business strategies with emphasis placed on the personnel work, especially high-quality human resources. Strengthening organizational structure shall be in association with improving the performance of military-run enterprises, thereby enhancing the Party’s leadership capacity over those enterprises. Simultaneously, investment shall be mobilized in technological innovation, infrastructure improvement and increased financial clout. Military-run enterprises’ business strategies shall be brought into line with their operating models and particularities, and requirements of international integration. In order to gain a foothold under the market mechanism, military-run enterprises shall wisely invest in trade promotion, trademark development and market expansion.

Fourth, importance shall be attached to the policy work towards employees from military-run enterprises which are subject to the restructuring. The restructuring directly affects tens of thousands of employees from military-run enterprises as a large number of them will have their positions transferred or made redundant. This complicated and sensitive problem will enable military-run enterprises’ restructuring to gain momentum if it is effectively addressed or the other way round. Therefore, alongside ideological and organizational work, relevant agencies and military-run enterprises shall focus their leadership and command on the restructuring by means of specific measures for reorganizing jobs and for redundant employees in accordance with their road map and statutory regulations. Measures for rotation and transfer of employees shall be made transparent with priority assigned to veteran and highly competent employees. In the meantime, existing benefits and policies for employees shall be opportunely implemented while amendments shall be in compliance with the State and MoD’s regulations and reality, thereby generating strong encouragement to employees’ material and spiritual  life.

The restructuring and improved efficiency of military-run enterprises, which is derived from objective reality, serves as a broad line pursued by the Party, Government, CMC and MoD. Based on a firm grasp of higher echelons’ guidelines and goals, military-run enterprises shall resolutely accomplish this significant political task in the face of overwhelming odds. This will be conducive to the continued combination of economy and national defense and vice versa, and the enhanced status and image of the Vietnam People’s Army, thereby joining the entire Party and people in national construction and defense.

Maj. Gen. Vo Hong Thang, PhD Director of Department of Economic Affairs, MOD

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