Ho Chi Minh City to halve state firms

Ho Chi Minh City to halve state firms

HANOI (AFP): Ho Chi Minh City is planning to halve the number of state enterprises under its administration by forcing weaker companies to close or merge by the end of next year, a report said yesterday.

But the plan by the city's Directorate of Industries has come under fire, as state firms accuse it of being heavy-handed, while others say it is too weak to kill off mortally wounded companies, the Saigon Newsreader reported.

At least half the firms -- or around 45 city-run companies -- will have to be merged, closed or "corporatized" by the end of next year, following the closure of 30 enterprises to date, said the newspaper, a digest of press reports in the southern city.

Nearly all the firms will be merged rather than shut down, the report said, adding that "some economists are ready to criticize the directorate for not taking tough measures once and for all" to deal with state firms.

Managers of the companies have countered with charges that the scheme is too harsh and that authorities have allowed state firms to sicken from a lack of investment or to be swamped by smuggled goods.

Mergers could backfire by linking stronger firms with weaker companies that would drag them down, the report warned.

Vietnam has announced several schemes for reviving its state sector, which the government has pledged will continue to play a leading role in the economy, but few of these plans have been executed.

Around half of the 12,000 state firms existing in 1991 have closed or been merged, and the government is considering cutting the number to just 500 over the next five years.

One plan is to merge large numbers of state firms into conglomerates aimed at competing more effectively in international markets with aviation, transport, construction, oil and energy becoming key sectors still held by the state.