July 1, 2010, is the date when the 2003 Law on State-owned Enterprises expires, according to the deputy minister of planning and investment, Nguyen Bich Dat. Dat was speaking at a seminar on the restructuring and development of State-owned enterprises in Ha Noi yesterday.

The new legal framework and structure would create opportunities and challenges for enterprises, policy makers and economic managers, he said.

"These factors need careful discussion in order to create breakthroughs in the structure of State-owned enterprises, and to help them establish a solid and competitive State economic sector capable of shouldering the economy."

There are currently 1,500 enterprises governed by the Law on State-owned Enterprises. Most of them operate in primary sectors of the economy such as oil, electricity, cement, steel and mining, which contribute greatly to the country’s GDP and the State budget,according to Dat.

Large State-owned enterprises faced major challenges during the time of transition due to their responsibilities to pioneering technological development, industrial expansion and enhancement of international competitiveness, he said.

Bui Duc Hai, deputy editor-in-chief of Vietnam Investment Review newspaper said: "The transition step is progressing slowly. The equitisation schemes haven’t created any major breakthroughs. The model for State economic groups is still a pilot project, which lacks a suitable legal framework." Hai said the main hurdles faced by State-owned enterprises were to do with the legal framework, internal management, supervision of State-ownership operations and their financial structures.

Le Thi Hoa, a member of Vietcombank’s management board, said that the restructuring of State-owned enterprises was the responsibility of the firms themselves.

"State-owned enterprises should be examined, filtered and rearranged, while ineffective enterprises should be closed. The remainder should apply the new ownership model to create changes in management and greater effectiveness," she said.

Furthermore, when enterprises begin operating under the Enterprise Law next July there may be potential gaps in legislation, according to head of the Central Institute for Economic Management’s Enterprise Renewal and Research Board Tran Tien Cuong.

"The nine-month period for transition is a relatively short time not only for the enterprises themselves but also for the authorities which will have to modify and amend legal documents."

One major hurdle is the fact that the Enterprise Law is mainly applicable to small-sized or independent State-owned enterprises, which could lead to potential problems when applied to large-sized firms with more complicated structures.

Other issues relate to the definition of ownership, which the Enterprise Law has not thoroughly addressed.

According to economic specialists at the seminar, the time is ripe for the transition.