Over many years, the State does not collect dividends from the enterprises it invests in. The sums of money have been left at the SOEs for the enterprises re-investment. While the left dividends have been increasing year after year, the capital use efficiency has not increased accordingly

How much can the State earn?

According to the Central Steering Committee on Enterprise Renovation and Development, by the end of 2012, the total state’s stockholder equity in economic groups and general corporations had reached VND735.293 trillion. This means that if the State just collects 10 percent of the dividends every year from these sources, the state budget would have VND7.352 trillion more.

The Vietnam Association of Financial Investors (VAFI) has estimated that if the State begins collecting 10 percent of its dividends from this year, it would have VND6.3-8.4 trillion.

The figure is still lower than the figure estimated by the Ministry of Finance and submitted to the National Assembly’s 6th session, about VND9.5 trillion. This does not include the dividends from the SOEs put under the management of the State Capital Investment Corporation (SCIC), the corporation specializing in making investment in enterprises with state’s money.

By the end of 2012, the profits made by 73 economic groups and general corporations had reached VND184.957 trillion. Of these enterprises, 46.5 percent got the ratio of profit on stockholder equity of 10 percent and 24 percent got the ratio at over 20 percent.

Once the dividends from the SOEs put under the management of ministries, branches and local authorities, and the profits from 100 percent state owned economic groups go to the state budget from 2013-2014, the budget would have trillions of dong more to spend, while it would not have to borrow from foreign sources or issue bonds.

What will happen?

Showing the strong protest was the prompt action taken by the managers of the state owned economic groups and general corporations when hearing that the government has made the proposal to the National Assembly.

Tran Xuan Hoa, Chair of the Vietnam Coal and Mineral Industries Group (Vinacomin), affirmed that the stockholder equity of the group has only increased to VND35 trillion after the last 19 years because the State did not take dividends every year. And now, if the group cannot use the dividends for its re-investment plans, it would lack capital for the investment and development.

A lot of questions remain unanswered, because it’ll take the government some more time to release a document to stipulate the collection mechanism.

Many holding companies do not make production, but live on the dividends and profits from the State’s capital contribution to their subsidiaries and joint ventures. What will happen if the subsidiaries also protest against the dividend collection mechanism like Hoa from Vinacomin, and if the government accepts to leave profits at subsidiaries? How will the holding companies be able to earn money to run their apparatuses?

It’s still unclear about the dividends to be collected by the state budget this year, VND9.5 trillion as reported by the government to the National Assembly, or VND6.5 trillion only as said by Deputy Prime Minister Vu Van Ninh on the sideline of the ongoing National Assembly’s session on November 14 due to the current economic difficulties.