Directive No. 854/CT-TTg on implementing the conclusions of Resolution No. 45-KL/TW dated April 10, 2009 of the Politburo regarding the pilot model of state economic groups and the policy to convert 100% state-owned enterprises into joint-stock companies.

DIRECTIVE

Regarding the implementation of the conclusion number 45-KL/TW dated April 10, 2009 of the Politburo on piloting the state-owned economic group model and supplementing policies to convert state-owned enterprises with 100% state capital into joint-stock companies

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On April 10, 2009, the Politburo issued Conclusion No. 45-KL/TW on piloting the economic group model and mechanisms and policies to prevent the loss of state assets; mechanisms and policies for selling shares to employees at shareholding enterprises and reforming the management mechanism of state-owned enterprises after shareholding. To implement this conclusion, the Prime Minister issues the following directive:

1. Ministries, ministerial-level agencies, agencies under the Government, People's Committees of provinces and centrally-run cities, Boards of Directors of state-owned economic groups and corporations 91:

a) Based on the strategy for socio-economic development and the actual conditions of the industry, locality, and enterprise, develop a proposal to adjust the schedule for restructuring and shareholding of state-owned enterprises with 100% state capital to ensure that all such enterprises will operate under the Enterprise Law in the form of joint-stock companies or limited liability companies by July 1, 2010; submit to the Prime Minister for consideration and approval in the third quarter of 2009.

b) While the land law has not been amended or supplemented, when determining the value of the enterprise for shareholding, the value of the business advantage of the enterprise (including geographical location, brand value, and potential for development) must be taken into account. Before approving the shareholding plan of the enterprise, the agency deciding on shareholding shall direct the shareholding enterprise to develop a land use plan consistent with the land use plan and the business purpose of the enterprise to submit to the competent authority for approval; for areas of land not included in the approved land use plan, the enterprise must return them to the State for other purposes.

Provincial People's Committees shall review the land use of state-owned enterprises with 100% state capital and state-owned enterprises that have been shareholding within their jurisdiction, immediately rectify violations, change the purpose of land use without the approval of the competent authority, encroach on land, leave land idle, or fail to put land into use according to the registered purpose.

2. The Ministry of Planning and Investment:

a) Promptly incorporate the opinions of government members, complete the draft Decree of the Government on piloting the state-owned economic group model, and submit to the Prime Minister for signing and promulgation in July 2009.

b) Take the lead and coordinate with relevant agencies to study and develop proposals to promptly separate the function of representing the ownership interest of state capital in state-owned economic groups and corporations from the state management function of the agencies.

3. Ministry of Finance:

a) Take the lead and coordinate with the State Bank of Vietnam and the Steering Committee for Enterprise Reform and Development in the third quarter of 2009 to report to the Prime Minister on regulations regarding the ratio of borrowed capital (debt) to equity capital of state-owned economic groups in line with the economic group model and the Financial Management Regulations of state-owned enterprises and state capital investment in other enterprises issued together with Decree No. 09/2009/NĐ-CP dated February 5, 2009 of the Government, ensuring the financial safety of the economic groups (in cases where state-owned economic groups require higher borrowing ratios than those stipulated in these regulations, the Ministry of Finance shall take the lead and coordinate with relevant ministries and sectors to submit to the Prime Minister for consideration and decision); the ratio of investment outside the main business area suitable for each economic group and measures to address the issue of economic groups engaging in non-core banking, securities, and real estate businesses despite having invested in these areas recently.

b) Promptly re-evaluate the value of state capital and assets in state-owned economic groups and corporations; complete this task for economic groups before December 2010.

c) Promptly perfect mechanisms and policies for converting state-owned enterprises with 100% state capital into joint-stock companies; study amendments to the provisions on including the value of land use rights in the valuation of shareholding enterprises to overcome current difficulties in implementing this; innovate, improve, and diversify methods of selling preferential shares to employees, including preferential measures to attract skilled workers who are committed to the enterprise for the long term; attract strategic shareholders, especially foreign strategic shareholders meeting the conditions to support enterprise development after shareholding while ensuring the interests of the State, the enterprise, and the employees; applying audit of enterprise value after consulting firms have valued it.

d) Propose sanctions for individuals who commit errors and cause the loss of state assets during the shareholding process.

đ) Ensure the selection and announcement of financial intermediaries with sufficient capacity to provide services for valuing enterprises and advising on enterprise shareholding.

e) Take the lead and coordinate with relevant agencies to develop legal regulations on managing state investment and business capital and state management of enterprises after shareholding.

g) Take the lead and coordinate with relevant agencies to study proposals to improve the organizational structure of the State Capital Investment Corporation to perform the function of representing the ownership interest of state capital in enterprises after shareholding, and submit to the Government in the fourth quarter of 2009.

4. The ministries managing the main business sectors of state-owned economic groups shall conduct reviews and analyses of the operational effectiveness of these groups, and on this basis report to the Prime Minister in the third quarter of 2009 on the current structure of business sectors within state-owned economic groups, propose the determination of their main tasks, business fields, and directions for diversified business development, and suggest adjustments to the organizational model and operations of the groups according to practical requirements.

5. The Ministry of Labor, Invalids, and Social Affairs shall study and propose to the Prime Minister reforms to the salary and bonus management mechanism in state-owned economic groups, creating autonomy for these groups in salary and bonus payments linked to labor productivity and business performance, ensuring harmony between the interests of the State, enterprises, and workers, thereby contributing to attracting highly skilled labor.

6. The Ministry of National Defense shall draft a pilot project to establish an economic group operating in the telecommunications sector based on restructuring the Military Telecommunications Corporation; the Ministry of Industry and Trade shall direct the Vietnam Chemical Corporation to draft a pilot project to establish a state-owned economic group operating in the chemical sector; the Ministry of Construction shall draft pilot projects to establish economic groups operating in the construction industry and heavy machinery and in real estate investment and business, to be submitted to the Prime Minister by July 2009.

7. The Ministry of Home Affairs, in collaboration with the Steering Committee for Enterprise Reform and Development, shall report to the Prime Minister in the third quarter of 2009 on necessary measures to enhance the capacity and operational effectiveness of the Steering Committee for Enterprise Reform and Development.

8. The boards of directors of state-owned economic groups:

a) Continue to improve internal management structures, focusing on developing production and business activities to ensure that together with state-owned corporations they remain key forces in critical sectors of the economy and actively participate in macroeconomic regulation and social welfare assurance.

b) Review business fields, investment portfolios, organizational structures, and operational mechanisms to adjust them in accordance with assigned tasks and long-term development strategies; propose to the Prime Minister and relevant management agencies adjustments and supplements to perfect the organizational and operational models for state-owned economic groups.

c) Based on assigned tasks and operational effectiveness, develop mechanisms to increase state capital to meet task requirements while ensuring effective business conditions, asset preservation, and growth.

d) Proactively collaborate with the Party Committee of Central Enterprises and related agencies in researching organizational and operational models for party organizations and mass organizations within state-owned economic groups, suitable for submission to the Central Organization Department.

9. The Steering Committee for Enterprise Reform and Development, in collaboration with relevant agencies, shall prepare mid-term evaluations and lessons learned from the pilot implementation of the economic group model in the third quarter of 2010 to report to the Politburo at year-end; study and report to the Prime Minister on five-year and ten-year plans for implementing the economic group model in necessary sectors, and draft proposals for restructuring state-owned corporations and companies to form strong state-owned corporations capable of dominating the economy, with increasingly significant roles, able to compete with other enterprises, groups, and corporations in the same industries within the region.

Ministries, ministerial-level agencies, government-affiliated agencies, provincial people's committees, state-owned economic groups, and state-owned corporations shall, based on the requirements of the upcoming reorganization, reform, and development of 100% state-owned enterprises, complete their organizational structures, enhance the capacity and operational effectiveness of their support staff in enterprise reorganization, reform, and development.

The Steering Committee for Enterprise Reform and Development shall be responsible for monitoring and urging the implementation of this Directive, regularly reporting to the Prime Minister.