State capital invested in enterprises is the capital of the enterprise, why does the law require asking for permission?
Some inappropriate and impractical regulations in the Draft Law on Management and Investment of State Capital in Enterprises have increased concerns that state-owned enterprises will miss out on opportunities and business opportunities.
Strong decentralization with accountability
Preparing to be submitted to the National Assembly at the 8th Session, opening on October 21, the Draft Law on Management and Investment of State Capital in Enterprises (Draft) has just been placed on the agenda of the National Assembly Standing Committee at the 38th Session.
According to the Government's proposal, it is necessary to amend the scope of regulation in the direction of not specifically regulating the content of "use of capital and assets at enterprises", but the use of capital and assets is regulated in the direction of "investment of state capital at enterprises". Regulations on capital mobilization, purchase, sale, use of fixed assets, management of receivables and payables are assigned to enterprises to decide in order to clearly identify the State as the owner of capital investment, management according to the capital contribution at enterprises, not to intervene administratively in the operations of enterprises, and to strengthen decentralization associated with the accountability of enterprises.
The representative of the drafting agency, Deputy Minister of Finance Cao Anh Tuan, said that the Draft stipulates that the Government unifies capital management through the capital owner representative agency, and the capital owner representative agency manages the capital portion at enterprises with State investment capital. The Prime Minister exercises a number of rights of the capital owner at a number of enterprises with large State investment capital, holding a leading, key, and important national position and role in the economy in each period.
According to the Draft, the capital owner representative agency is assigned to exercise the powers and obligations as an investor and equally with other investors, the rest is assigned to the enterprise to take responsibility. On that basis, specific regulations on the authority of personnel work, business strategy, annual business plan and profit distribution of the enterprise are specified. The Prime Minister only decides on the personnel of the head, business strategy of a number of enterprises holding leading, key and important positions and roles in the country according to a specific list in each period.
Mr. Le Quang Manh, Chairman of the National Assembly's Finance and Budget Committee (the examining body) said that after a preliminary examination, the Standing Committee of the Committee proposed clarifying the concept and determining enterprises playing a leading role and holding a key position in the economy or providing general principles for determination; at the same time, it was proposed to supplement regulations on the order and procedures for decision-making.
Another notable content is the principle and order of distribution of after-tax profits. The Government proposes to allocate no more than 50% to the Development Investment Fund to be held at the enterprise to invest additional capital in the enterprise to carry out business investment projects and projects to enhance the enterprise's management capacity. The balance of the Development Investment Fund held at the enterprise when the enterprise has no need or has no plan to use it will be submitted to the state budget or transferred between enterprises according to the Prime Minister's decision. The remaining amount after use and allocation of funds according to regulations will be submitted to the state budget by the enterprise.
According to this plan, the estimated amount paid to the state budget from profits and dividends will decrease by about VND 19,847 billion/year and enterprises can use this source to supplement their charter capital, which is VND 19,847 billion (according to the 2021 state budget revenue settlement approved by the National Assembly with the total amount paid to the budget from dividends, profits, and after-tax profits of enterprises being VND 69,463 billion).
The majority of opinions in the Standing Committee of the National Assembly's Finance and Budget Committee agreed with the maximum deduction level as stipulated in the Draft. However, it is recommended to consider and empower the owner's representative agency to decide on the specific level for each enterprise.
In addition, there is a proposal to stipulate a 100% deduction for the Development Investment Fund, because this is the profit after completing tax obligations to the State and creates an important resource for enterprises, especially small-scale enterprises, defense and security enterprises, and public utility enterprises to increase charter capital, reinvest in production and business, expand scale, improve investment efficiency and better perform assigned political tasks.
Don't sacrifice quality for speed.
There is high consensus on the need to soon study and amend the law, but opinions at the National Assembly Standing Committee still have many concerns about quality.
Chairman of the National Assembly's Economic Committee Vu Hong Thanh said that among the prohibited acts, there are decisions to invest capital that are not consistent with planning strategies and plans, and that the source of capital and the ability to balance investment capital cannot be determined.
- Chairman of the National Assembly Tran Thanh Man
“Recently, when we went to monitor the implementation of policies and laws on real estate market management and social housing development, many localities and businesses complained that when approving investment policies, they required that the investment project be in accordance with the planning, but it was not clear which planning it was in accordance with, and what the planning content was,” Mr. Thanh reflected.
According to the Chairman of the National Assembly's Economic Committee, this general regulation will cause difficulties in the implementation process.
In this amendment, the Draft stipulates that enterprises are not allowed to invest capital to establish enterprises, contribute capital, buy shares, or buy capital contributions in the real estate business sector. Enterprises with state capital are also not allowed to invest capital to establish enterprises, contribute capital, or buy shares in banks, insurance companies, securities companies, venture capital funds, securities investment funds, securities investment companies, and securities investment fund management companies, except for enterprises with the function of investing and trading state capital, and doing business in the fields of banking, insurance, and securities.
Mr. Vu Hong Thanh is concerned because the Draft is not suitable for reality and cited the case of state-owned enterprises after restructuring and rearranging, having surplus offices and headquarters, but not being able to lease them out. If they want to lease out the surplus offices and headquarters, they will have to have an investment project, approved and decided by the competent authority. This leads to waste, so Mr. Thanh suggested reviewing the above regulations.
Also concerned about the quality of the Draft, Vice Chairman of the National Assembly Nguyen Khac Dinh suggested reviewing the entire Draft to consistently reflect the ideas of Resolution No. 12-NQ/TW on continuing to restructure, innovate and improve the efficiency of state-owned enterprises.
The main idea is that the State does not directly intervene in the production, business and management activities of enterprises. State capital after being invested in enterprises is determined to be assets, capital of enterprises, but enterprises must ask for everything, enterprises must go through procedures for everything, thus losing opportunities and business opportunities.
“If you give capital, consider it as someone else’s capital, let them do it. You have to ask for everything, just ask for the level, ask for it according to this law and then follow another law. Reading Article 25, I see that nothing can be done,” Mr. Dinh worried.
According to Article 25, investment projects of enterprises shall be approved in accordance with the provisions of this Law. After the competent authority decides to approve the investment policy, the enterprise shall implement the investment project in accordance with the provisions of the law on investment, the law on construction and other relevant laws...
“Why is the private sector effective? Because people save time, procedures, and reduce costs of applying here and there. To research such application documents, one must hire a consultant, which is a large expense,” said Vice Chairman of the National Assembly Nguyen Khac Dinh.
Chairing the discussion session, Vice Chairman of the National Assembly Nguyen Duc Hai noted that to ensure the quality of the draft law, the Government should consider the opinions of the National Assembly Standing Committee and the reviewing agencies. “In case it is not possible to consider and explain in time, the Government should propose an appropriate time to report to the National Assembly, not ignoring quality for the sake of progress,” Mr. Hai emphasized.
Source: https://baodautu.vn/von-nha-nuoc-dau-tu-vao-doanh-nghiep-la-von-cua-doanh-nghiep-sao-luat-lai-bat-di-xin-d226905.html
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