i THAI NGUYEN UNIVERSITY SOUTHERN LUZON STATE UNIVERSITY Socialist Republic of Viet Nam Republic of Philippines TO THI NGOC LAN (ENGLISH NAME: JENNY) FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY DOCTORAL DISSERTATION AUGUST, 2013 ii THAI NGUYEN UNIVERSITY SOUTHERN LUZON STATE UNIVERSITY Socialist Republic of Viet Nam Republic of Philippines TO THI NGOC LAN (ENGLISH NAME: JENNY) FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY DOCTORAL DISSERTATION ADVISER: DR. JOANNA PAULA A. ELLAGA AUGUST, 2013 iii ACKNOWLEDGMENT I would like to express my gratitude to Dr. Joanna Paula A. Ellaga and Dr. Ooi Pit Tatt for being outstanding advisors and excellent professors. Their constant encouragement, support, and invaluable suggestions made this work successful. They have been everything that one could want in an advisor. I would like to thank them for providing me ideas on the research methodology and valuable insights on financial management system. I am deeply indebted to Dr. Nguyen Thanh Hai and Ms. Trinh Thi Hieu - International Training Center, Thai Nguyen University of the Socialist Republic of Vietnam, for their enormous pursuit to provide the Vietnamese people an opportunity to grow through education. Aslo, I would like to thank all the lecturers of DBA1 course for helping me to complete this dissertation which I have been their student for three years. I would like to acknowledge my best friends in the DBA 1 class for reviewing my dissertation and providing valuable feedback. I am grateful to Mr. Ngo Anh Cuong and Mr. Nguyen Duy Phuong for their help and valuable advice, and for being great friends throughout my program stint. I am deeply and forever indebted to my family for their love, support, and encouragement throughout my entire life. I would like to thank my husband, Nguyen Trung Kien, who has provided a tremendous amount of love and support throughout this study. On a final note with love are for my five-year old son! iv DEED OF DECLARATION I, To Thi Ngoc Lan (English name: Jenny), hereby submit my dissertation for oral examination, entitled “FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATION GROUP AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY”, truthfully declare that the said paper is a product of my original research investigation. Signed this …………………….2013 at Thai Nguyen University TO THI NGOC LAN DBA Candidate v TABLE OF CONTENTS CHAPTER I: 1 INTRODUCTION 1 1.1. Statement of the objectives 3 1.2. Significance of the Study 4 1.3. Scope and limitation of the Study 5 1.4. Definition of terms 6 CHAPTER II: 9 RELATED LITERATURE 9 2.1. Review of related studies 9 2.1.1. Foreign studies 9 2.1.2. Local studies 10 2.2. Theoretical and conceptual framework 12 2.2.1. Enterprise finance 12 2.2.2. Financial management system 16 2.2.3. Financial efficiency 23 2.3. Research Paradigm 24 CHAPTER III: 28 METHODOLOGY 28 3.1. Research Design 28 3.2. Time and Place of Study 28 3.3. Data collection method 28 3.4. Population, Sample and sampling technique 29 3.5. Research instrument 29 3.6. Data gathering procedure 30 vi 3.7. Data processing method 30 3.8. Statistical treatment 31 CHAPTER IV: 33 PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA 33 4.1. Profile of VNPT 33 4.1.1. Type of company 33 4.1.2. Size of company 34 4.2. Current status of financial management system of VNPT from 2010 to 2012 37 4.2.1. Capital mobilization in VNPT 37 4.2.2. Capital management and use in VNPT 47 4.2.3. Asset management in VNPT 59 4.2.4. Management of revenues, expenses and profit distribution in VNPT 71 4.3. Effects of financial management system on financial efficiency of the VNPT. 80 4.3.1. Assess the financial efficiency of VNPT 80 4.3.2. Effects of the financial management system to the financial efficiency of VNPT 81 4.4. Problem encountered by financial management system of VNPT 82 CHAPTER V: 83 CONCLUSIONS AND RECOMMENDATIONS 83 5.1. Summary of the findings 83 5.2. Conclusions 87 5.3. Recommendations 88 vii ABSTRACT In the background of deeper and wider regional and international economic integration, enterprises have to face with more formidable competition from big multinational economic organizations in the world. In order to adapt to that situation, meeting to demands for economic development and market expansion out of boundary of countries, many countries are incessantly increase scales of businesses, establishing and developing economic groups. Vietnamese enterprises are not out of that trend. The establishment and development of Vietnamese economic groups both ensure the suitability to the development tendency of global economy and exploit inherent competitive advantages of the country, speeding economic growth of the country. In order to ensure the high efficiency of those economic groups and State owned enterprises, it is necessary to improve efficiency of financial management system of economic groups. Although this system has taken much progress which has some certain effects on raising financial efficiency of the economic groups, many troubles and constraints still exist; for example, Financial management policies and measures of the groups are collectivistic, not closing to the actual situation of each State owned group, which has no small constraint on the financial effectiveness of economic groups in VietNam. To contribute to the enhancement of financial efficiency of economic groups in VietNam in the new situation, it is compulsory to research, innovate financial management system of economic groups. In expectation of contributing some ideas about perfecting financial management system of State owned economic groups, I, the author would like to choose the subject: viii “FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP (VNPT) AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY” for this dissertation. With such an approach to issues, the main objectives of dissertation is study the current status of system financial management of VNPT and its effect on financial efficiency of company. The specific objectives of this study are: (1) To identify the profile of the company in terms of the following: Type of the company and Size of the company; (2) To determine the current status of financial management system of VNPT in terms of the following: Capital mobilization, Capital management and use, Asset management, Revenue, expense and profit distribution management; (3) To assess the financial efficiency of VNPT in terms of the following financial ratios: the asset turnover ratio and the debtor days ratio; (4) To determine the effects of the financial management system to the financial efficiency of VNPT; (5) To identify the problems encountered in carrying out the financial management system of VNPT; (6) To propose actions that will respond to the problems encountered in carrying out the financial management system of VNPT. In order to obtain main objectives of study, the researcher used the descriptive method to get data which includes: Primary data was collected by sending questionnaires to 169 respondents (CFO of VNPT, director of financial department of VNPT, deputy director of financial department of VNPT, CFO of VNPT’s subsidiaries) working in VNPT and its subsidiaries and secondary data: From the annual financial reports of VNPT from 2010 to 2012. For assessing the current status of VNPT’s financial management system, the dissertation focuses on studying the profile and the formation and development process of VNPT as well as VNPT’s regulations on capital mobilization, management and use of capital and assets, ix management of revenues, expenses and profit distribution, thereby assessing financial management system and its effects on VNPT’s financial efficiency from 2010 to 2012. All this proves that the financial management system of VNPT effects positively to financial efficiency of the Group. x LIST OF TABLES Table 1. Distribution of the respondents 29 Table 2. Verbal interpretation 30 Table 3. The autonomic level of capital mobilization in VNPT 40 Table 4. The safe level in mobilizing capital of VNPT 41 Table 5. Assets and equity of VNPT from 2010 to 2012 42 Table 6. The autonomic level in mobilizing capital of the VNPT’s subsidiaries 43 Table 7. Clarity and fulfilment in harmonizing capital mechanism of VNPT 44 Table 8. Reasonable level regulated the loan limit at the rate payable on capital not exceeding 3 times: 45 Table 9. The level of autonomy and self-responsibility at VNPT in using and managing capital: 52 Table 10. Level of capital preserve in VNPT 53 Table 11. The level of responsibility in the management and use of the owner’s capital of VNPT 55 Table 12. The effectiveness of investment outsite the sector VNPT 56 Table 13. The transparency of ownership and the right of using assets in VNPT 67 Table 14. The level of conservation of the assets in VNPT 69 Table 15. The level of efficiency in the use of assets in VNPT 70 Table 16. The level of losses and wastage in the use of assets in VNPT 71 Table 17. The clarity and transparency in managing revenues, expenses, and profit distribution in VNPT 75 Table 18. The Level in harmonizing between the interests of the state, corporations and employees in managing revenues, expenses and profits distribution in VNPT 76 [...]... economic groups in VietNam in the new situation 1.3 Scope and limitation of the Study The studying scope of the dissertation is although based on the theoretical perspective of the financial management system of the State economic corporations in general, when studying the current status of the financial management system in the state economic groups in VietNam, the author focuses the study on VNPT The. .. performance of the EGs - The status of allocation and use of financial resources of the EGs - The status of distribution and use of operational efficiency of EGs 2.2.2.3.2 External factors of the EGs There are many external factors influencing the forming of the financial management system of EGs which are: - The guidelines and development policies of the State about the formation and development of the EGs... affects the survival of many economic groups in Vietnam In expectation of contributing some ideas about perfecting financial management system of State owned economic groups, I would like to conduct this study 1.1 Statement of the objectives This study intended to analysis of financial management system of VNPT and its effects on financial efficiency of the Group Specifically, the specific objectives of. .. financial management system in the economic groups Although those criteria have not been actually standardized, mentioning them in this research is a new contribution to suggesting further researching and completing the criteria on assessing the usefulness of the financial management system of the economic groups The research has further researched the nature of the financial management system as regulated... decision making Financial management provides managers with the information and knowledge they need to support operational decisions and to understand the financial implications of decisions before they are made - Ensure the availability of timely, relevant and reliable financial and nonfinancial information Financial management gives managers the information that either forms the basis for calculating financial. .. the profile of the company in terms of the following: 1.1 Type of the company 1.2 Size of the company 2 To determine the current status of financial management system of VNPT in terms of the following: 2.1 Capital mobilization (focus on financing activities) 2.2 Capital management and use (focus on investment activities) 2.3 Asset management 2.4 Management of revenue, expense and profit distribution... the author has written few pages of financial management in business groups; however, to some extent, the content about this issue is limit and suggestive From that time, the operation of the State owned enterprises in VietNam has had many alterations, so does the financial management system The issue of financial management system in the economic groups gets the attention of not only scholars in the. .. Chief Financial Officer EGs Economic Groups FMS Financial Management System SEG State owed Economic Group VNPT Vietnam Posts and Telecommunications Group xiv Thai Nguyen University Southern Luzon STATE University Socialist Republic of Vietnam Republic of Philippines Date, July 28, 2013 APPROVAL SHEET This dissertation, entitled, FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP. .. to ensure the freedom of self-determination of the SEG, loosening the inspection and supervision of the state agencies, wasting and loss of capital and assets may happen Therefore, finding solutions to well handle this relationship in the management of capital, assets in the SEG is very important The key of handing this relationship is based on the view of considering using effectiveness of capital,... expenses management and profit distribution in EGs Revenue, expenses management and profit distribution are the ways of Revenue, expenses management and profit distribution ruled by the State and EGs depending on the nature of ownership of EGs For state-owned EGs, the revenue, expenses management, and profit distribution is decided by the State Whether the state or EGs regulate, the contents of revenue, . decisions on gaining of financial resources, on determination of the optimum financial structure, on allocation of free finances, on distribution of profits, and on allocation of trade credits. The. identify the profile of the company in terms of the following: Type of the company and Size of the company; (2) To determine the current status of financial management system of VNPT in terms of the. to choose the subject: viii FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP (VNPT) AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY for this dissertation. With