Economic groups should play a key role in institutions for administrating businesses. To develop powerful economic groups, apart from creating a clear legal corridor, businesses should exert a greater effort to secure their own potential.

In the context when the Vietnamese economy is deeply integrating into the world economy, domestic businesses must compete on an equal footing with multinational economic groups at home. Hence, it is essential to establish a number of powerful groups involved in the key economic sectors, which will serve as a driving force behind the development of the national economy.

The concept of the economic group model is nothing new to the development of the global economy. Many major economic groups in the world are currently being restructured with the trend leaning towards merging and buying back stock.

In 2006, the total value of mergers and takeovers of economic groups in the world amounted to more than US$3,600 billion while the figure in 2007 hit a record high of US$4,400 billion, up by 21 percent over 2006. This trend has begun to have a certain impact on Vietnam’s economic development as well as its businesses’ operations.

At present, the establishment of economic groups in Vietnam in reality, means only a change in name and not in operation. Choosing this path, they will face unforeseeable difficulties if the criteria and the nature of the economic entity are not clearly defined. Meanwhile, the common model of a global economic group is based on the fact that affiliated companies have to complement each other in terms of production scale and types of products. This is also a good way of accumulating capital and raising the financial potential of groups.

Over the past five years, the private economic sector in Vietnam has maintained an annual growth rate of 10 percent on average and many private companies’ revenues have increased by more than 50 percent a year. The strong growth of this economic sector over the past decade has contributed a great deal to boosting the country’s economic development. Due to the fact that Vietnam is developing from a planned economy in which State-run businesses play a nearly absolute role, most Vietnamese groups are derived from powerful corporations.

Seven out of eight pilot projects to set up economic groups based on the Government’s Decree 91 have been adopted so far. These are the Post and Telecommunication Corporation, the Coal and Mineral Corporation, the Garments and Textiles Corporation, the Electricity of Vietnam, the Shipbuilding Industry Corporation, the Oil and Gas Corporation and the Rubber Corporation. In addition, there is a project to equitise the Vietnam Insurance Corporation in order to establish the Bao Viet Financial Insurance Group.

However, the slow implementation of such pilot projects has affected the process of equitising State- run enterprises.

As many as 108 corporations have yet to be equitised and the Vietnamese Government is resolved to complete the equitisation of all these corporations to post their shares on the stock market by 2010.

Source: VOV