MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY - SUMMARY OF PHD THESIS ENHANCING INFORMATION TRANSPARENCY OF STATE-OWNED ENTERPRISES IN VIETNAM Field: Business Major: Business Administration Code: 62.34.01.02 (New code: 9340101) NGUYEN THI HAI VAN Ha Noi - 2019 The thesis is completed in Foreign Trade University Supervisor: Assoc.Prof.Dr Le Thi Thu Thuy Reviewer 1: Reviewer 2: Reviewer 3: The thesis will be defended in front of the University level Council of Thesis Assessment at at … hour … date… month… year… The thesis can be found at the National Library and Library of Foreign Trade University LIST OF ARTICLES Nguyen Thi Hai Van (2018), Enhancing information transparency of state-owned enterprises in Vietnam, Review of Finance No2 (691) October 2018, pages 42 – 45 Nguyen Thi Hai Van (2018), Enhancing the roles of Government in order to ensure information transparency of state-owned enterprises in Vietnam, Asia – Pacific Economic Review No527 (October 2018), pages 62 – 64 TABLE OF CONTENTS INTRODUCTION CHAPTER LITERATURE REIEW OF INFORMATION TRANSPARENCY OF STATEOWNED ENTERPRISES 1.1 General theory of information transparency of enterprises 1.2 Theories of information transparency: 1.3 Overview of State-owned enterprises and information transparency of enterprises 1.4 Experience of information transparency of SOEs in some countries CHAPTER ANALYSIS OF INFORMATION TRANSPARENCY OF SOES IN VIETNAM 2.1 Overview of SOEs in Vietnam 2.2 Status of regulations on information transparency at SOEs 14 2.3 Status of information transparency of SOE in Vietnam 14 2.4 Analysis of financial factors affecting information transparency in SOEs 17 2.5 Assessment of status of information transparency at SOEs 19 CHAPTER SOLUTIONS FOR ENHANCING INFORMATION TRANSPARENCY OF SOES IN VIETNAM 20 3.1 Orientation of information transparency of SOEs in Vietnam 20 3.2 Solutions enhancing information transparency of SOEs 20 3.3 Proposals for State ownership representative agencies 21 3.4 Proposals for State management agencies and other related parties 22 CONCLUSION 23 INTRODUCTION Rationale A fundamental problem in corporate governance is the generation of information asymmetry in relation between owners and business managers The owner - the trustee - assigns his or her investment to the manager - the representative - to run the day-to-day business However, the representative often has an information advantage over the trustee and tends to exploit this to benefit himself instead of the investor State-owned enterprises (SOEs) in the broadest sense are also the type of public corporation with ownership belonging to the entire population However, people's ownership rights are entrusted to the Government for enforcement Therefore, strengthening publicity and transparency will lend a helping hand for state agencies as well as the whole society to monitor the activities of SOEs, avoid frauds and inefficient use, loss and waste of national resources; thereby putting pressure on these enterprises to operate more efficiently and at the same time, creating an initial database for state agencies to develop timely and effective governance policies Nonetheless, so far, many Vietnamese state-owned enterprises have not strictly complied with the regulations on publication and transparency of the issued information The situation of SOEs without information disclosure, slow, incomplete disclosure is quite common The question is how to impulse the equitization process of SOEs, accelerate the enterprises restructuring process towards better operational efficiency, more sustainably developing so as to be worthy of the economic pillar Part of the answer lies in enhancing information transparency of SOEs Meanwhile, in Vietnam, research on information transparency of SOEs is quite limited Stemming from that situation, the author selected the topic "Enhancing information transparency of state-owned enterprises in Vietnam" to implement the PhD thesis Purpose, thesis question and research duty Thesis is based on reasoning of information transparency of SOEs, evaluating the situation of information transparency of SOEs, in order to propose solutions to enhance information transparency of SOEs To achieve objectives above, there are three thesis questions as follows: 1) How was the situation of information transparency of SOEs in Vietnam? Is there any difference of information transparency between unlisted SOEs and listed SOEs in Vietnam? 2) Which factors impacts on information transparency of SOEs and to which degree? 3) How to enhance information transparency of SOEs in Vietnam in the coming time? Research object: Object of the study are theoretical and practical issues on information transparency of SOEs in Vietnam Research scope: Content scope: The thesis studies and evaluates the status of information transparency and factors affecting information transparency of SOEs in Vietnam (enterprises in which the State holds 50% of capital charter and over) When assessing the factors affecting information transparency of SOEs in Vietnam, due to limited access to information of macro and other micro factors, the thesis only focuses on Analysis of the financial factors of enterprises influencing the information transparency of the above enterprises Venue scope: The thesis does not go into the information transparency of a specific SOE but only evaluate the overall information transparency of SOEs on the basis of surveyed information which is published by SOEs via channels such as website of enterprises, information portal about SOEs of Ministry of Planning and Investment, information portal of state-owned shareholder representative agencies and other media According to information transparency of SOE in a number of countries, the thesis selected two countries neighboring to Vietnam that have advance in the implementation of information transparency of SOEs such as South Korea and Malaysia and lessons applicable to Vietnam Time scope: - Regarding the performance of SOEs, the thesis uses data from 2010 - Regarding to survey of information transparency, the author mainly surveyed in the last years as 2016 and 2017 to provide the most updated assessment of information transparency of SOEs in Vietnam Research methodology: Research methodology includes two main steps: Overall research by qualitative method and verification research by quantitative method Overall research by qualitative method: The thesis examines legal documents, regulation and instructions of information transparency at enterprises, collecting secondary data from reports, research results of information transparency of SOEs in the world and Vietnam Verification research by quantitative method: The study collects secondary data of financial information of SOEs to assess level of impact of those factors on information transparency of SOEs through running multiple regression model on STATA New contribution of the study Besides inheriting previous studies, the thesis had new contribution as follows: - As one of the first thesis to synthesize theoretical and practical issues on information transparency of SOEs, including definition, characteristics, content, evaluation criteria and factors influencing transparent information at SOEs - The study analyzes and evaluates the status of information transparency of SOEs in Vietnam in the past, thenceforth, outlines the shortcomings and causes - The study conducts quantitative analysis of financial factors affecting information transparency of unlisted and listed SOEs and draws conclusions that large size SOEs and have good business results tend to be more transparent - The thesis proposes orientations and solutions to enhance information transparency of SOEs in Vietnam, including solutions for SOEs and recommendations for State shareholder representative agencies, State agencies and stakeholders CHAPTER LITERATURE REIEW OF INFORMATION TRANSPARENCY OF STATE-OWNED ENTERPRISES 1.1 General theory of information transparency of enterprises 1.1.1 Definitions: 1.1.1.1 Information: Information is an abstract definition and has many different approaches According to Vietnam's Law on Information Access No 104/2016 / QH13, information is data that is contained in available documents, documents and documents are available, exists in the form of written, printed, electronic versions, pictures, drawings, tapes, records, audio recordings or other forms created by State agencies 1.1.1.2 Enterprise information Enterprise information is understood as a collection of data, news, data reflecting the situation of enterprises operation, related to enterprises, enabling users to make decisions to achieve desired goals 1.1.1.3 Information transparency: Information transparency in the market is understood as that economic entities (people, businesses or governments) can update market information in a complete, reliable, timely and available way and access easily (Vishwanath and Kaufmann, 1999) In a report published by WB on information transparency in financial sector, Tara Vishwanath and Daniel Kaufman (1999) introduced the concept of information transparency as: "Information transparency describes the flow of political, social, and economic information published reliably, timely In contrast, lack of information transparency is the intention that someone not want information to be accessed or falsify information or not ensure that the provided information is appropriate and qualified” From an enterprise perspective, Busman et al (2004) introduced the concept of financial information transparency as the availability of specific enterprise information for investors and outside shareholders From above analysis, the author understands that: "Information transparency is the information disclosed appropriately, reliably, promptly and in a way that the public can access." Stemming from the above understanding of transparency, enhancing information transparency is understood as measures to increase the appropriateness, reliability, timeliness and accessibility of published information of the business The measures here include activities related to corporate governance, building information systems within the enterprise or any activity that increases the relevance, reliability, timeliness and accessibility of published information of the business 1.1.2 Categorizing enterprise information 1.1.2.1 As content of information: i Financial information: Financial information is information related to cash flow, business results and financial status of enterprises in a particular period Financial information can be historical or predictive, often in the form of monetary unit (Nivra, 2008) ii Non- financial information: Non- financial information is predictive information about management plans, opportunities, risks, factors that enhance ability that create values in the long term for enterprises Non- financial information includes transactions with related parties, non-commercial objectives and policy commitment, ownership structure and governance structure, risk exposure, risk management (WB 2014) 1.2.2.2 As the mandatory nature of the information i Mandatory information Mandatory information is the one required by law to be published according to content and schedule Content of mandatory disclosure information includes financial information, information about the Board of Directors and the Board of Management, transactions with related parties shown in annual reports, interim reports , prospectus ii Voluntary information Voluntary information is optional information published by the law that enterprises voluntarily announce for the sake of prestige, corporate image, relations with investors, to supplement the insufficience of required information to satisfy users’ needs Voluntary information content is much diversified 1.1.3 The role of information transparency in the economy 1.1.3.1 To enterprises i Information transparency helps increase access to external financial resources, thereby reducing cost of capital use and increase asset value for businesses ii Information transparency contributes to increase the efficiency of enterprise operation iii Information transparency will reduce the impact of crises on enterprises 1.1.3.2 To the stakeholders Information transparency will help shareholders and investors understand the operational efficiency of enterprises, assess management standard of the Board of Directors and the Board of Management; thereby improving the ability to make reasonable economic decisions to reduce risks and protect their rights Information transparency also helps creditors, suppliers, customers and employees evaluate their position, adapt to changes and shape their relationships with businesses 1.1.3.3 To state agencies and the national economy Information transparency helps state agencies perform the function of managing and monitoring the market more easily and effectively; promptly have appropriate solutions to limit and prevent misbehavior Information transparency contributes to increasing asset value and improving business performance, ensuring efficient use of national resources; thereby promoting growth and development of the economy Information transparency also contributes to minimizing the negative impacts of world economic crises on the national economy 1.2 Theories of information transparency: 1.2.1 Theory of asymmetry: Asymmetry is the state when parties participating in transactions with different level information; one party with more information, more accurate information and easy or earlier access than the other, thenceforward, takes advantage of acquired information The situation when information is not sufficient, promptly, accurate, reliable and when there is an asymmetric access of people participating in financial market is a way of non-transparent information Asymmetric information will lead to two most common consequences that is reverse selection and moral hazard This will distort decisions of economic subjects to enter the market, may even lead to market failures Since then, Michael Spence (1973) proposed the signaling hypotheses and Joseph Stiglitz (1975) introduced a screening mechanism to reduce this asymmetric information 1.2.2 Theory of agency According to research by Michael C Jensen and William H Meckling in the “Theory of the firm: the Managerial behavior, agency costs and ownership structure” (1976), the theory of owner - representative (called as agency theory) define a proxy relationship as a contract whereby one or more individuals (principal) commit to another individual (agents) on their behalf to certain jobs including delegating economic decision-making to a representative Therefore, there is a conflict about the goals and interests between owners and managers, the status of asymmetric information between owners (less information) and managers (more information) Agency theory is often used to explain information transparency or increase voluntary interpretation of enterprise executives (Robert Bushman and Smith, 2001) Behavior of the agent (manager) in the issue of increasing the level of disclosure or transparency of information when considering between benefits and costs of information disclosure 1.2.3 Relevance theory According to Relevance theory, financial information is established based on assumptions: there is always an asymmetric information between the financial statements makers and the users; the demand of users for accounting information should be determined through factual evidence; satisfying users’ information is done through parties with interests related to the financial situation of the enterprise; the relevance of information needs assessing in the benefit-cost correlation Information transparency, especially financial information, is built on the basis of relevance of financial information for people who use information of businesses 1.3 Overview of State-owned enterprises and information transparency of enterprises 1.3.1 Definition of State-owned enterprises: In the world, there are many ways to define state-owned enterprises According to the World Bank, SOEs are economic entities owned or controlled by the State that generate income majorly from the provision of goods and services (WB, 1995) According to OECD (2005), "state-owned enterprises are used to refer to enterprises where the state has whole, majority or important minority control." In Vietnam, the Enterprise Law 2005 regulates that SOEs are enterprises in which the State owns more than 50% of charter capital (Article 4, clause 22) The Enterprise Law issued in 2014 defines SOEs as 100% state-owned enterprises (Article 4, Clause 8) However, many regulations about SOEs as defined in the Enterprise Law 2014 still apply to enterprises owned by the State with less than 100% of charter capital, including regulations on information disclosure (enterprise that the state holds less than 100% of charter capital shall disclose information according to Articles 108 and 109 - Enterprise Law 2014, applicable to state enterprises) On the other hand, the policy of reducing the number of SOEs with 100% state-owned capital, accelerating the equitization of SOEs, lead to the fact that the number of enterprises with major owned by State are still large This is an important object to study to ensure the sustainable and healthy development of these businesses as well as the capital of the people in which the State is the ownership representative In order to comply with international standards as well as the OECD concept, the thesis understands that state-owned enterprises are enterprises that the state enforces ownership or controls through owning 50% above of the shares that have voting rights and over; works to implement commercial goals or public policy objectives or both 1.3.2 Capital management model in SOEs The capital management model in SOEs is quite diversified in different countries According to OECD (2017), there are main models for managing capital in SOEs as follows: - Decentralized model: State capital is managed by specialized ministries and regulations corresponding to each sector The countries that maintain this model are Malaysia and Pakistan - The decentralized model has a coordination agency: According to this model, there is a consensus in the management through that the Government establishes a centralized agency to build and control the implementation of corporate governance and information transparency - The model concentrates on the form of a state-owned company: Bhutan and Kazakhstan maintain this model and allow the establishment of Druk Holding and Investments (Bhutan) and SamrukKazyna (Kazakhstan) to manage State capital at enterprises - Centralized model under a State agency or Ministry: Typically such as Korea and Thailand, these countries set up a specialized agency to implement ownership rights in SOEs 1.3.3 Characteristics of information transparency of state-owned enterprises Information transparency of SOEs and other types of businesses in the economy has something in common Yet, derived from SOEs' specific characteristics, information transparency of SOEs also has its own characteristics 1.3.3.1 SOEs have quite abstract owners who are the State, or actually the whole people Many State parties can affect SOEs as follows: Figure 1.1 SOEs-related management parties Source: OECD (2005) Therefore, the responsibilities and motives involved in disclosing information will be more limited than other businesses 1.3.3.2 Representatives in SOEs are also more complex than private enterprises Representative costs related to information transparency are also higher in SOEs 1.3.3.3 Managing conflicting objectives Governance of conflicting goals (profit and non-profit goals) is also a challenge in corporate governance of SOEs, which makes corporate governance SOEs and information transparency is much more complicated 1.3.3.4 In many countries, SOEs cannot change the Board of Directors by acquiring or voting proxy contest and most are not bankrupt This reduces the motivation of board members and managers in information transparency (the issue of benefits and costs of information disclosure) and non-bankruptcy also creates a soft budget constraint in information transparency 1.3.4 Content of information transparency of SOEs 1.3.4.1 Mandatory information transparency: Mandatory information is information that law requires enterprises to disclose Mandatory information transparency often includes: - Disclosing periodic information of enterprises - Disclosing abnormal information - Disclosing information as requested’ - Disclosing information relating 1.3.4.2 Voluntary information transparency Disclosing information voluntarily is based on economic theory “reasonable behavior of economists”, when managers consider the relation between benefit and cost of disclosing, if voluntary disclosing has benefit over cost, they will conduct disclosing, or else they will not conduct voluntarily (Yu Tian, 2009) OECD Corporate Governance Standards (2015) recommend that state-owned enterprises should disclose the following information: i Business objectives and results achieved (for enterprises owned entirely by the state, this content must include all tasks assigned by the state-owned agency) ii Financial and operational results of the enterprise, including costs and fund for public policy objectives (if any) iii Material risks can be anticipated and risk management iv All financial support, including guarantees received from the state; commitments made on behalf of the enterprise, including contractual commitments and obligations arising from public-private partnership projects v Issues related to employees and other stakeholders 1.3.5 Criteria for evaluating information transparency of state-owned enterprises 1.3.5.1 Relevance According to Céline Michailesco (2010), relevance means that the subject disclosing information must always pay attention to the needs of users to provide the most appropriate information Moreover, appropriate information is information that can make a difference in users’ decision making In order to meet that, the information must have a predictive value or a valid value or both 1.3.5.2 Reliability Reliability is guaranteed when quality information is verifiable; complying with accounting standards as well as relevant laws and regulations, financial information must be audited by reputable independent organizations According to Céline Michailesco (2010), 10 According to Trần Du Lịch, innovation progress can be divided into stages: 1991-1993 stage: reforming and restructuring production and business of the state economic sector; overcome the phenomenon of establishing a state-owned enterprise extensively in industries and localities during the period 1986-1990 1994-1997 stage: establishing SOEs force into State corporation - play a key role of SOEs; at the same time rearranging, diversifying ownership of small size SOEs; eliminating gradually superior management regime of SOEs 1998-2001 stage: Continuing to enhance and rearrange SOEs following the spirit of the Central Resolution (Term VIII), the highlight of this period is the strong implementation of the process of SOE privatization 2001-now stage: organizing a model of state financial investment corporation, continuing to equitize SOEs and the highlight is the policy of piloting state-owned economic groups (from 2005 to 2010) 2.1.3 Numbers of SOEs With the concept of SOEs in chapter of the thesis, according to the author, SOEs in Vietnam can be classified into the following main groups: * State-owned enterprises with 100% capital of the State (including economic groups, corporations, and limited liability companies) or enterprises with State ownership * SOEs have 50% or more of the State's contributed capital and less than 100%, including two types: - Enterprises with state capital are officially listed on the stock market (listed joint stock company) - Enterprises with unlisted State capital (limited liability companies with or more members, unlisted corporation) Along with above understanding, the General Statistics Office has summarized current numbers of SOEs in Vietnam as follows: Table 2.1 Total numbers of SOEs in Vietnam Unit: Enterprises Quantities 2010 2014 2015 2016 2017 - SOEs with 3281 3048 2835 2662 2486 + 100% state -owned 1801 1470 1315 1276 1204 + more than 50% state-owned 1502 - Non-state enterprise, including + Private companies 1520 1386 1282 268831 388232 427710 488395 541753 48007 49222 47741 48409 45495 220824 339010 379969 439986 496258 + Others Ennterprise capital Total 1578 with foreign investment Proportion of SÓE/total enterprises 7248 11046 11940 14002 16178 279360 402326 442485 505059 560417 1.2% 0.8% 0.6% 0.5% 0.4% Source: General Statistics Office 2017 In the Government Report (2017), by the end of 2016, there were 583 SOEs owned by the State with 100% charter capital (including economic groups, 67 State-owned corporations, 17 one-member limited liability companies that operate according to the model of parent company subsidiary company, 492 independent enterprises of ministries and localities; 273 enterprises have shares and contributed capital of the State (including 34 corporations, holding companies and 239 independent joint stock companies) 11 The number of enterprises with shares and contributed capital of the State fluctuates due to the following reasons: (1) some SOEs were not 100% owned the State, and were officially transferred into a joint stock company in 2015; (2) some joint stock companies transfer representatives right of the state capital owner to the State Capital Investment Corporation (SCIC); (3) The State has completed the divestment of all state capital in a number of joint stock enterprises according to the approved state capital divestment plan For equitized SOEs listed on the Vietnamese stock market with 50% or more of the state capital ownership, the author made statistics in 2017 as follows Table 2.2 Numbers of listed SOEs in 2010-2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 157 Total 69 89 125 131 133 158 168 180 SOEs listed 78 on HOSE 26 47 54 55 57 76 75 80 SOEs listed 79 on HNX 43 42 71 76 76 82 93 100 Source: Stockplus Thus, over time, the number of listed SOEs is increasing The number of listed SOEs in 2017 is nearly three times the number of enterprises in 2010 2.1.4 Numbers of employees in SOEs: Until now, SOEs is still a group of enterprises supplying jobs for labor force most Table 2.3: Average number of employees working at SOEs Unit: thousand persons 2010 2014 2015 2016 2017 SOEs 516 504 484 483 483 -100% state-owned enterprises 734 694 651 583 585 -More than 50% state-owned enterprise 258 265 284 390 388 - Non-state enterprise, including 22 18 18 18 16 + Private companies 13 9,8 9,8 9,8 8,6 + Others 24 19,7 19 18 16,9 Ennterprise with foreign investment capital 2972 312 316 297 279 Total 34.8 30 29 27.7 25.9 Source: General Statistics Office 2017 2.1.5 Fixed asset value and long-term financial investment in SOEs Although the number of SOEs is not much compared to non-state enterprises, however, the value of fixed assets and long-term financial investments in SOEs are similar, even higher in 2015 The value of investment in 2016 of SOEs had a slight decrease, but for SOEs with more than 50% of state capital, the investment value increased by about 20% Table 2.4: Value of fixed assets and long-term investments at enterprises Unit: trillion of VND Year SOEs 2010 2014 2015 1758.9 3358.6 4599.7 2016 2017 4366.6 4566.5 12 -100% state-owned enterprises -More than 50% state-owned enterprise 1140.9 2429.5 3171.4 618 929.1 1426.3 - Non-state enterprise, including 2129.7 3455.8 3862 + Private companies 126.1 124.2 + Others 2003.6 3360.2 3737.8 95.6 2597.8 2589.2 1768.8 1977.3 5856.5 6891.6 86.5 236.9 5770.0 6654.7 Ennterprise with foreign investment 4366.6 4566.5 1758.9 3358.6 4599.7 capital Total 1140.9 2429.5 3171.4 2597.8 2589.2 Source: General Statistics Office 2017 2.1.6 Organizational model for SOEs in Vietnam In Vietnam, SOEs are managed under the Enterprise Law (2014) i SOEs with 100% state capital Under the 2014 Enterprise Law, SOEs with 100% state capital operate under the form of one-member limited liability companies are managed and operated under one of the following two models: 1) President, Director or General Director and Supervisor; 2) Member's Council, Director or General Director and Supervisor ii SOEs with 50% to less than 100% of state capital State-owned enterprises with 50% to less than 100% of state ownership, depending on the type of enterprises, have a corresponding corporate governance model, including limited liability companies with two or more members and joint stock companies iii Economic group The organizational structure of economic groups including: parent companies (level 1), subsidiaries (level 2) and affiliates and enterprises under affiliates The management structure of the Economic Group is the Board of Directors / Members’ Council - General Director Supervisory Board or Board of Directors / Members’ Council - General Director - Supervisors 2.1.7 Business management model for SOEs Functions and duties of owners in SOEs are often carried out by the Prime Minister, line ministries and provincial People's Committees (PPCs) Based on their authority, they will appoint representatives of the State capital, who have the right to nominate members of Board of Directors and CEO of the company; and also directly involved in approving business strategies, business plans, budgets, large-scale investment projects, lending and investing/divesting, and appointing personnel The relationship between SOEs and government levels is divided into two levels: the central level (the Prime Minister and the ministries) and the provincial level (PPC) The Prime Minister directly represents State ownership in the parent companies of economic groups, State Corporations, large scale and important SOEs established by the Prime Minister One of the major changes of the state capital management model is that the Government has just issued Resolution 09/2018 / NQ-CP to establish the State Capital Management Committee at enterprises The State Capital Management Committee at enterprises is a Government-attached agency performing function of representing the ownership of enterprises owned by the State with 100% charter capital and state capital invested in joint stock company, limited liability companies with two or more members as prescribed by law 2.1.8 Business results of state-owned enterprises in Vietnam 13 2.1.8.1 General business results i Revenue Revenue of SOEs still accounts for a significant proportion of total revenue compared to all other types of enterprises Table 2.5: Revenue of SOEs from 2010-2016 Unit: trillions of VND 2016 2017 -100% state-owned enterprises 2033.50 2960.80 2722.20 2865.5 3126.3 -More than 50% state-owned enterprise - Non-state enterprise, including 1.517.6 1785.4 1660 1811.3 2036.9 515.9 1175.4 1056.2 1054.2 1089.4 + Private companies 4048.2 7039.5 8075.1 9762.1 11737.1 391.4 532.7 3776.8 6506.8 7558.9 9220.4 11263.6 136 3515.7 4151.9 4808.8 SOEs + Others Ennterprise with foreign investment capital Total 2010 2014 2015 516.2 541.7 473.5 5800.9 Source: General Statistics Office 2018 ii In terms of profit, the profit margin of SOEs also reached 5-6%, peaked in 2016 by 6.3%(100% state-owned enterprises) and 6.9% More than 50% state-owned enterprise ), higher than the profit margin of non-state enterprises, but lower than enterprises with foreign investment 2.1.8.2 Business results of SOEs with 100% State-owned In terms of SOEs with 100% capital owned by the State, in three years of 2014-2016, the situation of total assets, revenue and profit also decreasing was due to the number of SOEs was narrowing However, it is worrisome that the profit margin tends to be from 15.2% in 2014, down to 10% in 2016 This shows the business efficiency of 100% state-owned enterprise also has many problems 2.1.8.3 Business results of listed SOEs: In terms of privatized SOEs that are listed on Vietnamese stock market and have 50% of state capital and above, profit margin was around 10% , which all higher than of 100% stateowned enterprises mentioned above 2.1.9 General assessment of SOEs: So far, Vietnamese SOEs are still an important tool to ensure effective implementation of macro stabilization policies, control inflation, deal with market fluctuation and generate revenue for the State budget SOEs with state capital contribution also play a major role in implementation of providing public products and services, some SOEs in field of telecommunications services, infrastructure investment are still promoted strength in the market economy SOEs also create jobs for workers and bring large revenue to the economy Yet SOEs have many limitations such as: production and business efficiency and contribution of some SOEs are still low, not relatively to the State's investment resources, major losses still occur; the mechanism of SOE governance is slow to be reformed and ineffective, not suitable with international practices and standards; the separation of state management functions and the functions of state capital representative agencies in SOEs is slow; Many SOEs have not fully implemented the reporting regime for enterprises with representative agencies of owners and financial agencies as prescribed; The mechanism of punishment the managers as wrongdoings as well as handling violations of supervision and evaluation of SOE performance has not been fully and seriously implemented 14 2.2 Status of regulations on information transparency at SOEs The system of legal documents regulating publication and transparency of information in SOEs can be divided into the following two groups: 2.2.1 Provisions for SOEs are 100% owned by the State In addition to the 2014 Enterprise Law, SOEs with 100% capital owned by the State need to comply with regulations on information disclosure and transparency in the following legal documents: Decree No 81/2015 / ND-CP dated 18 September 2015 on information disclosure of SOEs regulating compulsory content disclosure, organization of information disclosure, electronic information portal of enterprises and regulations on handling violations of information disclosure 2.2.2 Provisions for SOEs with 50% to less 100% State capital In addition to the provisions of the Enterprise Law 2014, listed SOEs with 50% to less than 100% of state capital must also comply with securities provisions such as Securities Law 2006 and the Law on amendments and supplements of articles of Securities Law of 2010, Circular No 155/2015 / TT-BTC (Circular 155) guiding information disclosure on the stock market, Circular 121/2012 / TT-BTC dated 26/2012 7/2012 of the Ministry of Finance regulating on corporate governance applicable to public companies 2.2.3 Evaluation of legal regulations related to information transparency at state-owned enterprises The system of legal documents related to information transparency in SOEs is presently quite complete, approaching to the information transparency requirements of international organizations However, for unlisted SOEs and 100% state-owned SOEs, sanctions are in general, mainly warning, reprimand and administrative sanctions with quite low penalties On the other hand, on the means of information disclosure, SOEs with 100% state ownership are mainly published on the website and related management agencies, including the representative agencies, Ministry of Planning and Investment, Ministry of Finance leads to the publication of overlapped information, while the information disclosure obligations of these agencies are not clear Meanwhile, for listed SOEs, the method of information disclosure of enterprises as well as the management agency as the stock exchanges departments are clearly prescribed by law 2.3 Status of information transparency of SOE in Vietnam 2.3.1 Compulsory information transparency 2.3.1.1 Unlisted SOEs: i Relevance According to the report of the Ministry of Planning and Investment on status of information disclosure of SOEs in 2017, as of December 31, 2017, there were only 265/622 enterprises (accounting for 42.6% of enterprises) sending reports to the Ministry of Planning and Investment to publish information on the Enterprise Portal Of the total types of reports that must be published in accordance with the provisions of Decree No 81/2015 / ND-CP, most of the 265 enterprises has not disclosed fully information, on average, each enterprise only publishes about 5/9 types of reports According to the Ministry of Planning and Investment (2018), as of December 31, 2017, 55/ 77 enterprises (accounting for 71.42%) are economic groups, state corporations or large enterprises belonging to ministries, people’s committee of provinces and cities under central have made information disclosure in accordance with Decree 81/2015 / NDCP; Nonetheless, most businesses have not implemented fully and on time as required in this Decree Only 2/5 economic groups (VNPT, PVN) strictly and fully disclosed information (announced 9/9 reports on the announced deadline) The author conducted a survey on information transparency in SOEs based on widely published information on media Regarding the survey criteria, also through a preliminary survey, SOEs announced very limited information Voluntary information Therefore, the author only conducts surveys on compulsory disclosure of information according to Decree 81/2015 / ND-CP The above information is listed and scored For contents that have disclosed the information, businesses will get point Non-performing content will get points 15 Table 2.17 Transparent information survey of SOEs Number Question Does the company have a website? Does the website have a separate section on Information Disclosure / Information Disclosure? Does the company announce development strategy? Does the company announce 5-year plan of business - production and development investment? Does the company announce annual plan of business - production and development investment? Does the company announce report assessing results of implementing annual plan of business - production and development investment? Does the company announce report assessing results of implementing 3latest- year (to reported year) plan of business - production and development Does the company announce report of results of implementing corporate investment? social responsibilities? Does the company announce report of status of implementing annual arrangement, innovation of enterprise 10 Does the company announce report of status of business management and organizational structure? 11 Does the company announce 6-month financial report, year-ended financial statement? 12 Does the company announce report of benefit and compensation policy of enterprise? Source: Decree 81/2015 / ND-CP The results as follows: Bảng 2.13 Surveyed results of information transparency for unlisted SOEs 2016 2017 2018 More More More than than than 100% 50% 100% 50% 100% 50% statestatestatestatestatestateowned owned owned owned owned owned Tota enterpris enterpri Tota enterpris enterpri Tota enterpris enterpri Value l es se l es se l es se Mean 6.4 6.2 6.5 7.4 7.4 7.5 6.0 5.7 6.0 Max 9 10 10 10 11 11 11 Min 2 3 3 2 Observatio ns 28 11 17 30 16 17 33 18 15 Sources: Author’s results ii Timeliness: Regarding to report of Ministry of Planning and Investment, many SOEs not disclose information on time For instance, Vietnam Railways, deadline for announcing plan of production business and development investment in 2016 was on 31 March 2016, but it was not until 21 December 2016, Vietnam Railways announced, which means the publication was late nearly months behind the deadline iii Reliability 16 There is not much basis to evaluate reliability of information disclosure of SOEs Report of status of SOE information disclosure in 2016 shows that only six economic groups have hired independent auditors to complete the financial statements 2015 as prescribed In which, economic groups hired international auditing companies in Vietnam to conduct audits (VNPT hired E&Y, EVN and PVN hire Deloitte), economic corporations hired domestic auditing companies to implement (VRG hired Vietnam Auditing and Valuation Company Limited AVA, Vinachem to hire AASC Auditing Firm, TKV to hire PKF Company Limited) On the other hand, information on sanctioning SOEs violating regulations on information disclosure related to the reliability of information is also limited and hardly available Therefore, the author does not have enough basis to assess the publicity, transparency and objectivity in assessing production, business, revenue and profit of these SOEs iv Accessibility Currently, the popular channels for investors to access SOE information is the information channel of the State management agency (Ministry of Planning and Investment), the management agencies of SOE ownership, information from financial information intermediaries, information channels from SOEs For the information channel of the State management agencies, namely the electronic information portal of the Ministry of Planning and Investment (www.business.gov.vn), it is mainly periodic information and unusual information is rarely updated on this portal The update of this site is also restricted when many enterprises still not have information published For information portals of state-owned representative agencies, as of December 31, 2017, there were only 6/15 ministries and ministerial-level agencies (only units with state enterprises included), / 63 provinces and cities under central and 6/6 economic groups are subject to information disclosure with their own sections under this regulation For website of SOEs: most enterprises have information disclosure section, which provides information about annual financial reports, corporate governance reports, and business - production situation monthly sales However, the information required by law to be transparent is not complete or not updated v Responsibility of the information disclosure party On SOE websites, information on information publishers or information disclosure authorizations as well as officers responsible for information disclosure is difficult to find Therefore, if investors have questions and requests for explanation, it is very difficult to approach the specialized person of the company The explanatory information also mainly complies with the legal regulations on accountability, and the explanation required by investors is rare 2.3.1.2 For listed SOEs on stock market In 2016, 2017 nd 2018, Vietstock's online information portal of finance and securities, in collaboration with the “Tai chinh va Cuoc song” newspaper, with the sponsorship of the Vietnam Association of Financial Managers conducted a survey on the compliance levels of regulations on compulsory disclosure of information under Circular 155/2016 / TT-BTC of the Ministry of Finance on information disclosure on the stock market The results show that the number of SOEs meeting information disclosure standards has increased 2.3.2 Transparency of voluntary information 2.3.2.1 For unlisted SOEs Most of the 44 SOEs surveyed did not disclose voluntary information above This shows that the voluntary information transparency of unlisted SOEs is weak in quantity and quality 2.3.2.2 For listed SOEs on the stock market The author based on the study of Pham Duc Hieu and Do Thi Huong Lan (2015), Vu's study (2012) as well as Circular 155/2015 / TT-BTC guiding information disclosure on the stock market, the author has listed 30 evaluation criteria of main voluntary information groups listed by companies, including: Company and Strategy Information (10 criteria); Financial information and capital market information (12 criteria); forecasting information (8 criteria) (see Appendix 3) 17 Each criterion with information disclosure is relative to point The author has conducted a survey of voluntary information transparency of 158 SOEs listed on the stock market in 2017 and 2018 based on the information published by enterprises, including annual reports and websites of enterprises Table 2.15: Voluntary information transparency survey results of listed SOEs Point Min Max Mean Standard deviation VDSC (Enterprise and Strategy Information) 2.1/10 2.2456 VDFC (Financial and capital market information) 11 4.2/12 1.8791 VDFL (Forecasting information) 2.1/8 1.4120 VIDI (Vietnamese information disclosure index) 22 8.4/30 3.6378 Source: Results of the author's investigation Thus, the voluntary information transparency of listed SOEs in 2017 and 2018 is quite weak The average score is 8.4/30 points, equivalent to nearly 30%, the lowest level is points and the highest is 22/30 points Considering each published information group, the information group about businesses and business strategies has the worst performance with the highest standard deviation, financial information has the best 2.4 Analysis of financial factors affecting information transparency in SOEs 2.4.1 Research model Research hypothesis Table 2.18: Hypothesis of model Explanatory variables Theoretically influencing sign + Theoretically influencing sign + Business performance efficiency (ROA, ROE) Efficiency of use of asset (TURN) + + + + Tangible asset (TANG) +/- + Financial leverage (LEV) - - Enterprise scale (SIZE) The model is built on five financial characteristics of an enterprise to test the factors affecting the level of information transparency, including business size, business performance of enterprises, efficiency of use of assets, proportion of fixed assets and financial advantage: Model (1): MBTTit = β0 + β1SIZE(X) it + β2 ROA(X) it + β1 TURNit + β4 TANGit + β5LEVit + εi Model (2): MBTTit = β0 + β1SIZE(X) it + β2 ROE(X) it + β1 TURNit + β4 TANGit + β5LEVit + εi In which: - MBTTit: is the dependent variable, showing the level of information transparency of Enterprise i in time t; The MBTT variable for unlisted SOEs (Group 1) is based on scoring in table 2.12 above The MBTT variable for SOEs listed on the stock market (Group 2) based on the survey results of Vietstock in years 2016 and 2017, if the enterprise meets the information disclosure standard, it scores 1, or else it receives a value of - SIZEit = natural logarithm of total assets of Enterprise i in t-1 period; - ROAit: Return on total assets of Enterprise i in t-1 period; 18 - ROEit: Return on equity of ENterprise i in t-1 period TURNit: Turnover of total assets of Enterprise i in t-1 period; TANGit: this is n ratio of fixed assets to total assets of Enterprise i in the period of t-1; LEVit: this is a ratio of liabilities to total assets, calculated according to the Debt / Total assets formula during t-1 period The financial data of enterprises are gathered from the financial statements of unlisted and listed SOEs in 2016, 2017 and 2018 For group 1, after some observations, there are not enough financial and sample data then the remaining are 91 observations For group 2, the sample consists of 217 observations 2.4.2 Statistical and correlation description SOEs in group have average average points of 6.6 / 12 points, businesses with average average assets of VND 66400 billion, average ROA of 3.8%, average ROE of 6.6%, average fixed assets ratio (TANG) 32% of total assets and the average debt ratio is 48%, the average asset turnover is 0.91 rounds Enterprises in group have average total assets of VND 4620 billion, average ROA of 8%, average ROE of 13.7%, fixed asset ratio (TANG) of 28.6% of total assets and average debt ratio is 46%, the average asset turnover is 1.2 rounds Thus, except for the smaller scale and fixed assets ratio of SOEs in group 2, profitability of group SOEs (including ROE, ROA) is better than group The debt ratio of the two groups is similar In terms of correlation, correlation coefficient between variables of the two groups is less than 0.5, still in allowed limitation on correlation coefficient Thus, there is no multicollinearity phenomenon here 2.4.3 Regression results The author proceeded to run OLS with MBTT - dependent variable and independent variables and control variable for groups of SOEs mentioned above The results are shown in Table 2.24 Table 2.23 Regression result for groups of SOEs Group Group Group Group Coefficient PCoefficient PCoefficient PCoefficient Pvalue value value value 0.228* 0.055 0.0001 0.998 0.223* 0.057 0.0015 0.957 LnSize TURN 0.321 0.451 0.0168 0.571 0.388 0.349 0.0202 0.496 TANG 1.473 0.181 -0.0994 0.493 1.469 0.174 -0.0763 0.602 -4.26E-16 0.823 0.0274 0.878 2.34E-16 0.902 -0.1189 0.469 0.008 0.7867*** 0.005 0.703 0.588 ROE ROA 14.051*** LEV 7.322** Intercept -1.309 R2 Number observations of 0.026 1.3471*** 0.002 0.706 0.681 0.3062 -1.30404 0.4054 14% 16% 12% 15.5% 91 217 91 217 Source: Author’s summary from STATA 19 Note: * and ** refer to the estimated coefficients (shown in bold) in Table 2.21 which are statistically significant at 5% and 1% respectively Through the above regression results, for group 1, Prob (F-statistic) model of model is 0.0065, model is 0.0076 indicating that the models are suitable for R-square respectively 14% and 12% showed that 14% and 12% of variation of information transparency in SOEs in the period of 2016-2018 is explained by the variables in the model (1) and (2) The model studies the influence degree of the factors such as firm size, profitability on information transparency of SOEs 2.5 Assessment of status of information transparency at SOEs 2.5.1 Achievements - The publication of information on the operation of state-owned enterprises has improved over time, initially created transparency in society, become an effective tool for the State to monitor usage of the State's resources in these enterprises, avoid frauds, ineffective use, loss and waste of resources - Most SOEs have their own information channels to serve information publication - The information content is getting more and more complete and timely - Information transparency in SOEs is assessed as increasing stability, creating trust in society for SOEs, initially helping state agencies in managing usage of state capital in private business 2.5.2 Constraints - The compulsory information transparency of SOEs is implemented formally - Voluntary information transparency has not been taken seriously - The role of information disclosure of the representative agencies is still unclear - Responsibility for information disclosure has not been focused 2.5.3 Reasons for constraints 2.5.3.1 Reasons from SOEs First, poor performance of SOEs is considered one of the main reasons for inadequate information transparency motivation Secondly, SOEs themselves are not fully aware of the role of information disclosure, benefits directly affecting the operational efficiency of enterprises and ability to attract investors in the market Thirdly, corporate governance of SOEs is mostly inefficient Fourthly, it is the issue of costs and benefits of information transparency for information disclosure objects in the market Benefits of information transparency, as mentioned in Chapter 1, are the increase in business efficiency, ability to raise capital, increase stock prices in Vietnam's conditions are not clear Therefore, SOEs are not motivated to implement information transparency on the stock market 2.5.3.2 Reasons outside SOEs Fifthly, the legal regulations on handling violations of information disclosure are inadequate against the seriousness of the non-transparency of information Sixthly, the process of sanctioning information transparency violations of state management agencies has not focused on considering responsibilities of related parties to handle the right people and the right jobs Seventhly, state management limits and overlaps Eighthly, the technical and information infrastructure system serving for information disclosure is still weak, which leads to increase in risks for investors Ninthly, it is the state-owned representations themselves, in charge of SOEs that perform poorly information transparency This leads to common thoughts that SOEs will not comply with the requirements set by the Ministry, and ignore the regulations on information disclosure Tenthly, independent auditing and credit rating that are not effective 20 CHAPTER SOLUTIONS FOR ENHANCING INFORMATION TRANSPARENCY OF SOEs IN VIETNAM 3.1 Orientation of information transparency of SOEs in Vietnam It can be said that the role of SOEs in Vietnam's economy in the past is undeniable In the future, the Party and the Government still claim that SOEs continue to be the core force of the state economy, an material force, as a support tool for the State to regulate the economy, stabilize macroeconomic and contributing to promote the socio-economic development of the country towards socialist orientation Viewpoints on implementing information transparency at SOEs - Information transparency at SOEs ensures the principle, that state-owned enterprises operate according to the market mechanism, taking economic efficiency as the primary evaluation criteria, self-reliance, self-responsibility, fair competition with enterprises of other economic sectors as prescribed by law - Information transparency is an inevitable trend of all economies - Pressure from development of 4.0 industrial revolution with Big Data, Internet of things, machine learning, and blockchain… makes information transparency more powerful - Information transparency of SOEs follows international regulations, standards 3.2 Solutions enhancing information transparency of SOEs 3.2.1 Enhancing business efficiency of SOEs The research results in Chapter have shown that the larger size of SOEs is, the higher the business efficiency will be the more important information transparency of the enterprises is Therefore, enhancing business efficiency of these enterprises will be one of the important solutions to implement information transparency To improve business efficiency, SOEs need to focus on the following contents: - Restructuring the fields of business, re-evaluating the effectiveness of each project, avoiding widespread investment outside core business areas and unable to control effectively - Restructuring the market: SOEs need to reevaluate the business market, forecast market fluctuations, reevaluate products in business, pay attention to quality innovation, packaging, implement business, marketing strategy professionally - Optimize resources used in the enterprise, including machinery, fixed assets, staff capacity, and labor force, shorten production processes, eliminate waste in enterprise - Restructuring capital in enterprises, which gradually reduces the high debt ratio in SOEs, resolving financial problems through debt trading companies or marketizing debts - Need for statistical evaluation the enterprises with low/ high profit margins so that the State can review the investment Accordingly, for businesses with low profit margins, investment is limited However, businesses with high profit margins of 20-30%, they should be invested more so that after a few years, big economic corporations will be established -Increasing training to improve qualification of business management staff to meet the management requirements in the market mechanism 3.2.2 Completing the corporate governance system In order to complete the corporate governance system in SOEs, it is necessary to focus on the following main contents: i Role of independent BOD members and decision-making mechanism of the Board To ensure the balance and effectiveness of the board of directors' activities, SOEs should focus on the participation of independent members and the decision-making mechanism of the Board Independent members, decision-making mechanism and processes of the Board are very important because it is related to many significant issues such as: approving strategic plans, approving business and financial plans of enterprises, decisions relating to organization of the 21 annual general meeting of shareholders, electing the Chairman of the Board of Directors, increasing charter capital, issuing shares, restructuring the organization ii Shareholders' rights assurance Ensuring implementation through mechanisms to encourage shareholders to exercise their rights, especially voting rights, or grouping together to exercise their rights, shareholders are free to access other information about external enterprises; information according to regulations must be implemented fully, properly and promptly iii Internal control and audit system A highly independent internal control and auditing system ensures corporate governance efficiency, thenceforth, transparent governance and accountability become one of the top priorities of the business 3.2.3 Raising awareness and responsibility of SOE managers for information transparency The process of hiring managers for SOEs needs to be strict and meet international standards more, in which good managers not only have professional capacity, experience, and network of relations but also have the integrity and legal compliance 3.2.4 Developing a code of conduct and ethics for state-owned enterprises The promulgation and implementation of codes of conduct and ethics in enterprises, which regulates information transparency obligations of individuals, including business managers, Board members For stakeholders of enterprises such as shareholders, employees, creditors will contribute to enhancing the transparency of information in enterprises 3.2.5 Development of information systems in enterprises First of all, improving the quality of information is reflected in factors ensuring the accuracy of the data presented in the financial statements Besides, improving information capacity is reflected in factors that enhance the information presented in the financial statements On the other hand, enterprises need to pay attention to the development of information disclosure policies in enterprises and the mechanism of determining personal responsibility to participate in the information disclosure process SOEs also need to have a plan to develop information technology infrastructure in order to actively participate in integrating into state management database, and provide financial reports with advanced format 3.2.6 Focus on transparency of sustainable development information of SOEs In order to enhance voluntary transparency of SOEs, enterprises themselves need to raise awareness about sustainable development reports, essentially providing voluntary information, including environmental and social and community information Currently, the three main organizations provide standards, guidelines for sustainability reporting, which according to the author are the most comprehensive in terms of environment, society and economy; These are: GRI (GRI - Global Report Innitiative), SASB (Sustainable accounting standards board) and IIRC (International Integrated Reporting Council), in which GRI is the most widely known and used standard for sustainability reporting, is for businesses to start developing sustainability reports, to keep them simple SOEs can refer to SASB or GRI standards to see important, useful information for investors, minimum cost-effectiveness and reporting required Single sustainable development in accordance with standards such as GRI, SASB, enterprises can advance to a higher step than product Combine the information obtained from sustainable development reports into corporate governance and operations 3.3 Proposals for State ownership representative agencies 3.3.1 Develop and implement general reports on entire SOEs on an annual basis according to international practices According to OECD (2005), general report should focus mainly on financial information and value of SOEs The report provides general information on the value of state assets, a statement of state capital management policies and information regarding to how to implement policies The financial statements in the report include asset turnover, profit, and cash flow from 22 business operations, total investment, and return on equity, debt ratio, and dividend payout ratio The report also provides analytical information for each specific SOE According to OECD recommendations, the report should be provided on a 6-month basis 3.3.2 Developing a set of monitoring tools for SOEs performance according to superior international practices in the world Owners should be active and proactive in setting targets that SOEs must implement The development of these indicators needs to be compared to enterprises in the same industry, as well as supplementing indicators according to good practices such as labor productivity, export value, technology level, level of information disclosure of enterprises 3.3.3 Building information technology infrastructure system to operate the function of representative of ownership representative agency Quality technology infrastructure helps management decisions of the owner agency more properly, more timely and more efficiently Algorithms and data analysis tools can be applied, even application of artificial intelligence to serve the analysis, forecast and decision making of owner agencies To accomplish this, the owner agencies need to invest in building and operating a monitoring information system, connect online with SOEs, this system can automatically evaluate and compare implementing indicators with planning targets, assess the progress of implementing projects, social tasks on the same database collected from enterprises 3.3.4 Application of a set of corporate governance rules for SOEs In 2015, SCIC signed a cooperation agreement with Japan International Cooperation Agency (JICA) then JICA supported the construction of corporate governance rules (referred as CGC) for enterprises with contributed capital of SCIC The difference of CGC with the legal documents of the state on corporate governance is not compulsory but enterprises can "apply" or "explain" CGC sets higher requirements than the law, in order to help businesses further improve their corporate governance system At the same time, with the characteristics of companies on SCIC's portfolio, there is a big difference in scale, scope of operation, business model, organizational structure, management method, risk profile When implementing effectively at SCIC's member units, the rules can be completed and applied for enterprises with 100% State capital and 50% or more of State capital 3.4 Proposals for State management agencies and other related parties 3.4.1 Promoting the process of equitization, reducing state ownership, eliminating preferential treatment for SOEs This is both a policy for development of SOEs in the future and a solution to enhance information transparency for SOEs The equitization will help reduce the number of SOEs 100% owned by the State to form a joint stock company or a limited liability company with or more members, thereby creating information disclosure pressure on these SOEs 3.4.2 Innovating SOE management model Although the current model for managing state capital in SOEs has made progress, there are still many overlaps in management The current mechanism is inappropriate since as being assigned as state ownership representative, many ministries implement the owner's authority ineffiently and no specific government official is responsible for operational efficiency of SOEs Specifically, SOEs in Vietnam need a more active and proactive state-owned agency 3.4.3 Improving legal framework for SOE information disclosure 3.4.3.1 Agreement on regulations on SOE information disclosure Currently, there are differences in regulations on information disclosure between SOEs 100% owned by the State and unlisted SOEs from 50% capital owned by state and listed SOEs from 50% of the state owned capital on Vietnamese stock market In particular, the regulations for listed SOEs are the most specific, closely followed by regulations on handling violations Considering that SOEs are a special object of enterprises, it is necessary to have strict 23 management and supervision of the State's capital, therefore, the author thinks that there should be an agreement between the legal regulations for all types of SOEs mentioned above 3.4.3.2 Specifying regulations on sanctioning information disclosure violations It is necessary to consider imposing regulations on sanctioning violations of information disclosure for joint stock companies for SOEs Thus, raising the level of information disclosure penalties is essential to increase the warning effect on participants in the market and supplement detailed regulations on accountability for individuals who are responsible for information disclosure in the enterprise 3.4.4 Other recommendations 3.4.4.1 Clarifying the monitoring mechanism for the agency representative The Ministry of Finance should preside to help the Government organize the monitoring of information disclosure by owner representative agencies The government needs to set targets to monitor this activity as well as check the information disclosure of these agencies on a regular basis 3.4.4.2 Heading to apply international accounting and auditing standards for SOEs Vietnam should soon apply a reliable and timely financial information regime Financial statements of SOEs should be publicized to ensure transparency, accountability and budget discipline Besides internal audit, SOEs should be independently audited in accordance with International Auditing Standards (IAS) 3.4.4.3 Improving ability of people to access the State accountability The Law on Access to Information passed by the National Assembly in 2016 officially came into force from July 1, 2018 In order for the law to be truly effective, it is necessary to have a mechanism to follow, evaluate and monitor the implementation of the right to access information One of the traditional monitoring mechanisms is the internal monitoring mechanism through dealing with administrative complaints A general trend of countries recently is to establish an independent Information Committee to undertake the task of supervising the implementation of the right to access information This Commission's decision is enforceable and administrative agencies must comply 3.4.4.4 Enhancing the role of credit rating agencies The credit rating companies in Vietnam need investment, better preparation of implementation resources, including financial and non-financial resources, including information sources for credit ratings and method, credit rating team On the other hand, regarding the operational mechanism of organizations, the company needs to head to that information on credit ratings must be a mandatory requirement when SOEs borrow capital This is the way the worldclass credit rating companies operate and maintain operations in the most sustainable way 3.4.4.5 Strengthening the role of media agencies, research agencies and people in transparent information monitoring at SOEs CONCLUSION For more than half a century of development, Vietnamese SOEs have experienced many ups and downs However, information transparency is still a sore problem for SOEs, which has directly affected the trust of people and investors as well as the sustainable development of these enterprises From the analytical, theoretical arguments as well as practice of information transparency in SOEs, the thesis has been completed and has the following contributions: - Systematizing theoretical issues on information transparency in SOEs Especially based on systematizing different understandings of information transparency, the thesis provides specific definition, concepts about business information transparency - Based on the theory of information, the thesis has pointed out the necessity of information transparency in SOEs for investors, enterprises themselves, the State as well as the economy in general 24 - The thesis provides clearly content of information transparency of SOEs (including of Mandatory information transparency and Voluntary information transparency) and criteria for evaluating information transparency of SOEs - Analyzing experience of information transparency of SOEs in South Korea, Malaysia, drawing lessons for the implementation of information transparency of SOEs in Vietnam - Analyzing and evaluating business results, organizational models, business management model of SOEs - Analyzing and evaluating status of regulations on information transparency at SOEs - Analyze and evaluate the status of information transparency in SOEs in Vietnam in the past time, thereby, highlight the inadequacies and causes Vietnamese SOEs despite efforts in information transparency, there are still many addressed issues: Compulsory information transparency is still weak in quality (appropriateness, completeness, reliability and timeliness), accessibility of users and responsibility of information publishers; Voluntary information transparency has not yet been focused; Violation of information disclosure is quite common, but the mechanism of detection and sanctioning is still ineffective, the role of owner representative agencies in transparency of information is still fuzzy - The thesis analyzes quantitatively factors affecting the information transparency of unlisted and listed SOEs in the market and draws conclusions that SOEs with large scale and good business results tend to have better information transparency - The thesis proposes orientations and solutions to enhance information transparency for SOEs in Vietnam, including solutions for SOEs and recommendations for State capital representative agencies and management agencies and related parties However, due to limited access to information of SOEs, the thesis cannot observe factors affecting the information transparency of SOEs such as corporate governance factors and SOE auditing to draw on comprehensive assessment of information transparency of SOEs in Vietnam This is also a limitation of the thesis that the author expect to complete in the following studies ... international auditing companies in Vietnam to conduct audits (VNPT hired E&Y, EVN and PVN hire Deloitte), economic corporations hired domestic auditing companies to implement (VRG hired Vietnam Auditing... State Capital Management Committee at enterprises The State Capital Management Committee at enterprises is a Government-attached agency performing function of representing the ownership of enterprises... CHAPTER ANALYSIS OF INFORMATION TRANSPARENCY OF SOES IN VIETNAM 2.1 Overview of SOEs in Vietnam 2.1.1 Role of SOEs in Vietnam SOEs in Vietnam have been established with the development of the state