(Mr): Phung Xuan Minh. [Chairman of the Board of Directors of PT Group & Saigon Ratings]
The economic development of many prosperous and powerful nations around the world demonstrates that state-owned enterprises are not an outdated business model, but remain a crucial economic force in many countries. The core issue is not whether the State should own state-owned enterprises, but rather what the State’s purpose is in owning them, what governance policies should be implemented, what principles should state-owned enterprises operate under, and whether they can create real value for the national economy. This is a crucial issue, both theoretically and practically, in terms of managing and developing the economy of each country.
In reality, many countries around the world have used state-owned enterprises (SOEs) as a strategic tool to lead infrastructure development, ensure energy security, develop foundational industries, promote innovation, support exports, enhance national competitiveness, and protect essential interests during periods of volatility. However, success only comes when SOEs are organized, managed, and operated according to a professional, transparent, market-disciplined, and clearly accountable governance model.
1. LESSONS FROM THE SUCCESS OF STATE-OWNED ENTERPRISES IN SEVERAL COUNTRIES
China is a prime example of using state-owned enterprises to promote industrialization, modernization, and play a proactive role in strategic sectors. Many of China’s central state-owned enterprises are tasked with focusing investment on key national economic sectors such as energy, telecommunications, infrastructure, railways, finance, manufacturing, high technology, and emerging industries.
A notable lesson from China is that the state not only maintains state-owned enterprises in traditional business sectors, but also directs them to invest heavily in strategically important national industries such as future technologies, artificial intelligence, new energy, new materials, and digital infrastructure.
However, China’s experience also shows that state-owned enterprises (SOEs) that want to maintain a leading market role must undergo continuous restructuring. Mergers, specialization, streamlining of industries, concentrated investment in core areas, and enhanced competitiveness are mandatory requirements. SOEs cannot develop by spreading resources thinly, investing outside their core business, or relying too heavily on preferential resource allocation or administrative mechanisms. In the new era, SOEs are only truly strong when they possess technological resources, management expertise, productivity, and international competitiveness.
Japan offers another lesson: the state doesn’t necessarily need to directly own too many manufacturing businesses, but can use development finance institutions to provide long-term capital support to the economy. Policy finance institutions, such as the Japan Development Bank, have contributed to providing medium- and long-term capital for infrastructure, industry, innovation, green transformation, and strategically important sectors. The lesson from Japan is that the state-owned economy needs to act as “seed capital,” supporting sectors where the private market finds it difficult to invest in development due to long payback periods, high risk levels, or where social benefits outweigh short-term financial gains for businesses.
South Korea is a highly relevant case study regarding effective oversight, evaluation, and disciplinary mechanisms for state-owned enterprises. South Korean state-owned enterprises and public organizations are managed within a relatively rigorous evaluation system, linking performance to leadership accountability, transparency, and fiscal risk control. The key lesson here is that state-owned enterprises cannot operate effectively without clear performance measurement and evaluation mechanisms. Each enterprise needs financial goals, public service goals, productivity targets, innovation targets, and a transparent evaluation mechanism.
In Southeast Asia, Singapore stands out as a model through Temasek. This is a state-owned enterprise operating on commercial principles, with professional portfolio management, long-term investment, and a relatively clear separation between state management functions and capital ownership functions. A major lesson from Singapore is that the state can hold capital in important enterprises, but should not manage them through daily administrative orders. Instead, the state needs to play the role of a professional owner, setting long-term goals, selecting the right management team, demanding transparency, and evaluating performance based on tangible results.
Malaysia, with its Khazanah system, is also a noteworthy example in the region. Khazanah not only manages state assets but also links investments to national development goals, business transformation, infrastructure connectivity, digital capacity development, energy transition, and long-term competitiveness enhancement. The lesson from Malaysia is that state capital needs to be placed within a clear portfolio strategy: which economic sectors the state should retain ownership in, which require private sector cooperation, which should the state divest from, and which require new investment to create future growth momentum.
From the practical lessons learned above, we can draw a common conclusion: the success of state-owned enterprises does not depend on increased state protection, but rather on better corporate governance and management capabilities. The success of state-owned enterprises depends on the ability to formulate appropriate business strategies, clearly defined roles, responsibilities, and functions, transparent governance, professional personnel, market discipline, and the ability to create long-term value for the nation.
2. POLICY RECOMMENDATIONS FOR MANAGING STATE-OWNED ENTERPRISES
For Vietnam, international lessons are of great importance in the process of developing the state-owned economy in the era of national progress. First and foremost, it is necessary to clearly define the scope and mission of state-owned enterprises. State-owned enterprises should focus on truly key economic sectors such as energy, strategic infrastructure, finance and banking, defense and security, data, core technologies, logistics, critical resources, and essential services that the private sector is unable or unwilling to fully invest in.
Secondly, it is necessary to clearly separate the functions of state management from the functions of state capital ownership. State management agencies should not interfere too deeply in the day-to-day business operations of enterprises. Conversely, state-owned enterprises must be granted commensurate autonomy, but with greater accountability. Granting power to enterprises without control will create risks of losses; excessive control without granting power will cause enterprises to miss opportunities, slow innovation, and be less dynamic and creative in competition.
Thirdly, it is necessary to raise the standards of governance for state-owned enterprises in accordance with international practices. The board of members, board of directors, executive board, and internal control system must be professionally managed and operated, possessing independent capabilities, and have effective risk management, auditing, information disclosure, and oversight mechanisms. Transparency is not only a requirement for financial reporting, but also for business strategy, investment plans, accountability for financial obligations, management and operation of large investment projects, business transactions with relevant stakeholders, and the efficient use of state capital.
Fourth, the mechanism for evaluating the performance of state-owned enterprises needs to be reformed. Performance should not be judged solely on revenue, profit, or budget contributions, but rather on multiple indicators such as capital efficiency, labor productivity, technological innovation, competitiveness, contribution to economic security, spillover effects on the private sector, fulfillment of public service duties, and impact on national sustainable development. For state-owned enterprises performing policy-related tasks, the public service aspect should be separated from the commercial business aspect to avoid confusion between business performance and social responsibility.
Fifth, it is necessary to promote state-owned enterprises (SOEs) to become the driving force of innovation. In this era of growth, SOEs cannot rely solely on existing assets, natural monopolies, or traditional market share. State-owned corporations and enterprises must invest heavily in key economic sectors such as digital transformation, big data, artificial intelligence, green technology, renewable energy, circular economy, smart supply chains, and modern governance. SOEs must become major customers, major investors, and major partners in the domestic innovation ecosystem.
Sixth, a new cooperation mechanism needs to be built between state-owned and private enterprises. The state economy should not overshadow the private economy, but should create markets, pave the way for private development, and participate in key national projects. In infrastructure, energy, logistics, digital transformation, high-tech industries, and public service projects, state-owned enterprises can play an initial leading role, sharing risks, standardizing markets, and attracting private enterprises through transparent, equitable, and effective public-private partnership models.
Seventh, state-owned enterprises (SOEs) need to be placed within the long-term national vision and the pressures of international competition. SOEs should not only serve to preserve capital, but also to generate profits, ensure efficient utilization of state assets, unlock national resources, and enhance national competitiveness. When reformed in the right direction, SOEs will not be a burden on the economy, but will become a leading, modern, transparent, and efficient driving force for economic development in the era of national progress.
