UNIT 1

The ability's person will decide investor

Nguyen Quang Vinh
The vice-director of the Ministry's Building contruction
Management Department ( Ministry of Agriculture and
rural development)
02/09/2006
TTCT- The institution will be delivered to the
management, exploitation, using of investment projects as
an investor that is neccessary .But if you say all the
construction investment projects have to do that , I think
that should be considered. Because this is the fact that
Ministry of agriculture and rural development has
encountered in the management of invested capital from
budget , ODA for projects in infrastructure investment .
-To clarify management and investment activities
-Investors must be user works
-To rent a project management consultant organization
-To hire counsellor will avoid taking a rake-off on the
worker's wages
In many cases, for projects of medium and small size ,the
organization will be assigned to manage and use the
building which is reasonable .But if it is applied to the
projects of large size,related to many provinces and many
local will procedure a problem whether the ability's
investor were met. In the field of agriculture, investment
management for large scale irrigation projects is one of
the problems of this type .
The investment in the construction of large water
reservoirs, water conservancy project in state of
completion that no local and province project of
management team can endure.For example,Cua Dai of
water reservoirs, construction with the moistness up to 1,5
billion cubic meters ,the barrage over 100metres high, we
assigned the director of Department of Agriculture and
rural development to the director of project management
team . Because the issues related to the scale of this
construction are very complex. If they don't specialize in
this problem, they will not make.
UNIT 10

Why are state enterprises ineffective?

There have been widespread and inconclusive discussions
about the ineffectiveness of State-owned enterprises
(SOE) in Vietnam. Report of the State Audit has shown
that SOEs are very inefficient ,even prolonged losses,
four-nineteen units are audited business losses in 2004;
eleven-nineteen units have accumulated losses with the
total accumulated loss up to the end of 2004 is 1.058
billion dong.
The pre-tax profit margin of audited firms was very low
(from 0.18% to 0.8%), of which the group appeared to be
very strong such as 0.42% Shipbuilding Industry, Textile
0, 8%...
Reports of previous years also showed a similar situation
with corporations , with corporations having completely
lost all its capital without paying off debts such as
Seaprodex, a trump card. Lam Dong announced five
members of Corporation Mulberry Silk VN bankruptcy.
Why are SOEs so inefficient? There are many reasons,
there are several main causes mentioned here.
Firstly, people often think encourages owners are not
important, so owners do not have effective measures to
govern. Everyone knows that a private owners bring own
money going business concern vital to their capital,
because it is their property, they have the right to dispose,
use, manage and benefit (or loss).
This is extremely encouraging. When the ownership and
management rights are split apart, the incentives are
weakened to a certain degree. Encouragement of people
who share capital in a weaker company than the owner of
a private company. Encouraged of small shareholders in
a joint stock company's weaker than the major
shareholders and and owners of limited liability
companies or private companies.The incentives of the
(ultimate) citizens for SOEs are the weakest, and they
often refer to it as "the temple".
The State should not be too emphasized the "whole people" of
SOEs which should really be considered as their own, by the
state organization? But in any case, the incentive of the owner is
not as strong as that of the private
This state incentive is only effective where there are clear laws,
healthy competition, competent managers, hard budget
constraints, and an overview of all SOEs. Make up a small part
(eg less than 15% of the economy)

There are efforts in that direction,but at present certainly

these conditions are not good, so the State should sell its
businesses at reasonable prices to increase the efficiency
of the economy and thus increase competitiveness of the
country.
Secondly, the budget constraints of SOEs is soft. State
still behave favorably not forcing SOEs to strict fiscal
discipline. The budget restriction is the total amount of
money or property that can guarantee a loan that a
household (or household) has to pay within that range.
Soft budget constraints when external circumstances
make businesses think that the limit is not hard and pass
without being punished. Do not allow budget constraints
to be softened by priority measures, subsidies,
exemptions, credits, or tolerance payments.
SOEs have to understand: to take care of, and if the
constant losses must be bankrupt, no one stood out for
help. Private enterprises obviously have hard budget
constraints. Tax debts, debts of the State, debt mutual
giant has forced the State to take measures to postpone
debt re in recent years, the concessional loan giants are
expressions blatant of binding soft budget.
Soft budget constraints that businesses are not sensitive to
profit, with savings, increased performance, and cause
other harm. This is probably the weakest point makes
inefficient SOEs.
Many people doubt the audit data. Maybe, but having
audited and publicized is a big step forward. Businesses
can be more efficient, but managers want to cut back on
profits to make them easier to share, so they can be sold at
cheaper prices, easier to sell when equitized. It could also
be the reason to pay attention to.
Thirdly, non-competitive environment of equality and
mismanagement. SOEs remains a priority openly without
being concealed ,even if they are considered a national
policy and in the past there were separate laws regulating
them
Why Singapore SOEs are quite effective? There is a
healthy competitive environment, SOEs are treated like
other businesses, strict law, and management team are
trained,qualified (they hired many foreign operator) and
occupancy rates are not high in the economy.
Currently the SOE sector generates 38% of GDP,
accounting for over 60% of total credit ,the majority of
land resources and minerals of the country. If these
resources and resources are allocated to other sectors that
are more efficient than using them, it will be much more
profitable for the country to contribute to creating
conditions for SOEs to effectively operate