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.