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VIETNAM ACADEMY OF SOCIAL SCIENCES GRADUATE ACADEMY OF SOCIAL SCIENCES LE NA THE CURRENT LAW ON CORPORATE GOVERNANCE IN VIETNAM Major: Economic Law Code: 38 01 07 SUMMARY OF DOCTORAL THESIS IN LAW HANOI - 2019 The Doctoral thesis was completed at: GRADUATE ACADEMY OF SOCIAL SCIENCES Supervisor: Assoc Prof Dr Nguyen Nhu Phat Reviewer 1: Prof Dr Nguyen Thi Mơ Reviewer 2: Assoc Prof Dr Duong Dang Hue Reviewer 3: Assoc Prof Dr Vu Thi Lan Anh The thesis is defended before the thesis appraisal board of the Academy at the Graduate Academy of Social Sciences at: hours, date month 2019 The doctoral thesis can be found at: - National Library of Vietnam; - Library of Graduate Academy of Social Sciences LIST OF AUTHOR’S PUBLISHED WORKS Le Na (2017), Restructuring state-owned enterprises according to current Vietnamese law, Journal of People’s Court, No.22, December 2017, pages 40-46 Le Na and Hoang Mi (2018), Assessment of legal framework for state-owned enterprises and making suggestions, Trade and Industry magazine, No.7, May 2018, pages 188-194 Le Na (2018), The law on transparency, supervision in governancing Vietnamese enterprises and international, Trade and Industry magazine, No.9, June 2018, pages 32-36 PREAMBLE The urgency of the Topic In Vietnam today, corporate governance is a matter attracting much attention of researchers and investors as well as business managers But in fact, the research on corporate governance often focuses mainly on joint stock company (“JSC”), especially listed and public joint stock companies Until the time when SOE is recognized as 100% state-owned enterprise - the time when the Enterprise Law 2014 came into effect, it only operated in a single form of onemember limited liability company (“One-Member LLC”) Therefore, in terms of form, the regulations on JSC governance almost no longer affect SOE, while the governance in One-Member LLC with 100% state-owned capital has not been focused on specific characteristics of SOE Therefore, the focus of research on SOE governance should be considered urgent Purpose and task of research 2.1 The purpose of the research: The purpose of the Thesis is to base on the theoretical model of SOE governance to identify the current status of statues and the implementation of the law on SOE governance in context of international integration and improvement of legal institutions of market economy in Vietnam today The ultimate purpose of the Thesis will be the proposal of appropriate solutions to supplement and improve the legal regulations and enforcement of SOE governance in Vietnam Thereby, the Thesis contributes to improving the capacity of SOE governance and at the same time limiting the socio-economic consequences arising from the weaknesses in SOE governance in order to improve the business performance of SOEs today 2.2 Research tasks: On study of the economic nature, the specific legal nature of SOE, thereby clarify the theoretical and practical implications of SOE governance according to the current Vietnamese law; explore the dominant factors which influence on SOE governance and the basic contents of Vietnamese law on SOE governance; Research and compare models, legal regulations, standards and international practices on SOE governance; Analyze and assess status of the law and enforcing the law on SOE management so that it can point out the shortcomings and insufficiencies in law and the practice of SOE governance compared to the needs of SOE governance and with international standards on corporate governance in general and SOE governance in particular; Analyzing and evaluating to determine the direction and giving appropriate solutions to supplement and improve and enforce the law on SOE governance in our country's current economic conditions Subject and scope of the research 3.1 Subject of the research: Forms of SOE according to Enterprise Law 2014; SOE models in the past; Contents of corporate governance and SOE governance; the impacts on SOE under the policy of developing the SOE system in Vietnam; The system of legal regulations on corporate governance in general with focus on the law on SOE governance in Vietnam; Legal regulations, standards, practices and international experience in corporate governance in SOEs 3.2 Scope of the research: Until now, the concept of SOE has changed, SOE must be the enterprise with 100% charter capital owned by the State That is, there is no matter of capital linkage in SOE, therefore, the model of JSC governance cannot apply to the form of one-owned enterprise such as SOE Therefore, in order to ensure the consistency between the Enterprise Law 2014 and the Law on management and use of state capital in 2014, the Thesis only focuses on research on the governance law of enterprises with 100% state-owned capital operating in the form of One-Member LLC Methodology and research methods 4.1 Methodology Throughout the Thesis, the researcher uses the method of dialectical materialism and historical materialism of MarxismLeninism At the same time, the Thesis applies the views of our Party and State on the leading role of the state economic sector, focusing on SOEs for the development of the socialist-oriented market economy in our country today Besides, the general principles of corporate governance in the market economy, the above mentioned theories etc are also used to solve research tasks 4.2 Specific research methods Methods of analysis and synthesis are used in almost all contents of the Thesis Methods of analysis and synthesis of secondary documents and statistical methods are used to collect, synthesize and evaluate documents on the status of SOE governance laws in Vietnam and international lessons and experiences Comparative and typical methods are used to analyze and evaluate models and laws on SOE governance in some other countries in the world; Assessing the limitations, disadvantages and shortcomings of the legislation on SOE governance in relation to the principles of SOE governance as recommended by OECD New points of the Thesis First, the Thesis analyzes and systematizes concepts, legal bases, theoretical issues related to corporate governance and the law on SOE governance; Second, it provides information, finds problems and objectively assesses the status of SOE governance in accordance with current Vietnamese law; Third, the Thesis proposes specific views and solutions on the basis of objective judgments in the real situation combined with the comparison of modern corporate governance principles and governance laws of other countries to improve the law on SOE governance in Vietnam The scientific and practical significance of the Thesis The Thesis builds a theoretical system of SOE governance and the law on SOE governance, including the author's point of view The Thesis also clarifies the relationship between the role of legal regulations on corporate governance and the effeciency of SOE At the same time, analyze and assess the current status of the law on SOE governance in Vietnam, on that basis, work out orientations and solutions to improve the law on SOE governance Therefore, the Thesis has the scientific and practical significance Structure of the Thesis In addition to the preamble, conclusion and list of references, the Thesis is structured with chapters: Chapter 1: Overview of research situation, theoretical basis and research method Chapter 2: Theoretical matters on SOE governance and the law on SOES Chapter 3: Current situation of law and enforcement of state governance law in Vietnam today Chapter 4: Views and solutions to improve the law and the efficiency of the law on SOE governance in Vietnam today Chapter OVERVIEW OF RESEARCH SITUATION, THEORETICAL BASIS AND RESEARCH METHOD 1.1 Overview of research topic 1.1.1 Scientific works related to the topic of this Thesis 1.1.1.1 Research in overseas Group of research works related to corporate governance and SOE governance: Regarding the concept of SOE, countries in the world have their own definitions and names However, when considering the above mentioned concepts, it shows a common point on the nature of diversity in the structure of SOE Governance of SOE often presents many weaknesses and lower levels of effective governance compared to corporate governance in the private ownership sector The corporate governance manual of IFC (2010)[156] in Vietnam has systematically reviewed and analyzed Vietnamese legal documents on corporate governance in effect at the time of 2010 Basing on that, a general assessment of corporate governance laws in Vietnam was given and SOE is not outside the scope of the study G20 / OECD (2015) [150] is a Code of Conduct with major parts on OECD recommendations focus on public JSC Group of research works related to the status and implementation of the law on SOE governance: OECD (2014) [171] was based on the actual survey results of applying good practices on corporate governance in countries in Asia, including Vietnam The report has quite specific assessments of information disclosure, ownership and control matters In particular, the assessments of the law enforcement mechanism, the organization of law enforcement organs and the system of corporate governance laws mentioned above This is a source of "good guidance and practice" to help managers as well as policy makers in Asian countries in general and in Vietnam in particular to have a broader view of the implementation of governance practices in their countries Group of research works related to solutions to improve and implement the law on SOE governance, OECD (2005) recommends the governance of SOEs by 06 specific proposals: First, ensuring the legal framework and effective regulations for SOEs; Second, establishing a unified policy system to ensure transparent and effective implementation of governance in SOEs through the role of State ownership; Third, ensuring shareholders are treated fairly; Fourth, recognizing the responsibility between SOEs and stakeholders by the State's ownership policies; Fifth, standardizing the transparency and disclosure of information; Sixth, recommending the Board of Management of SOEs to have the adequate capacity and authority to carry out their responsibilities in the most objective and impartial way and be responsible for their decisions 1.1.1.2 Research in Vietnam Group of research works related to the rationale and status of the law on corporate governance and SOE governance: Pham Duy Nghia's research (2015) [98] makes it easy to imagine the economic picture of Vietnam in integration time through a legal perspective At the same time, it directly refers to the model of SOE, as well as generally analyzes and assesses legal issues surrounding this model, including governance issues Pham Duc Trung (2011) [122] has reviewed the legal system on SOE governance by 2011, which reveals many shortcomings and obstacles to the improvement of SOE governance Group of research works related to the implementation of law on SOE governance: A picture of the status of SOEs in Vietnam over the past time with "much more darkness than brightness" is the content in Nguyen Thi Thanh Vinh's research (2016) [127] Another picture of the current status of corporate governance law, by Pham Duy Nghia (2013) [96] has outlined the overview of corporate governance in Vietnam with information and warning numbers At the same time, it also assesses and proposes the application of modern governance model as well as specific experiences and lessons of other countries on corporate governance in Vietnam Group of research works related to solutions to improve and inhance the effectiveness of implementing the law on SOE governance: The authors Pham Duc Trung (2011), Pham Tri Hung and Nguyen Trung Thang (2012), Nguyen Thanh Tam (2013) suggested one of the urgent solutions of the law on SOE governance Le Vu Nam (2012) affirmed that it is necessary to consider the amendment, supplement or issuance of a new regulation on corporate governance at that time Sharing the same idea, one of the solutions of Le Minh Toan (2015) is the promulgation of separate regulations on state governance Nguyen The Manh (2014) [88] proposed solutions to publicly disclose all responsibilities and obligations of SOE in its production and supply of public services and its social responsibilities as well as the State's goals for each business; to promulgate and disclose clearly and transparently the appointment merchanism for members of the Board of Directors of enterprises with 100% state capital The building of corprate model and governance framework suitable for SOEs in Vietnam is proposed in many studies ineffective for many years The main reason comes from the management capacity, from the provisions of the law on governance in SOEs which are not strict enough and cannot ensure feasibility Currently, corporate governance worldwide is recommended to follow OECD principles and models, including recommendations on SOE governance In principle, Vietnamese SOEs can apply the OECD model but because SOEs in Vietnam exist in a imperfect market economy mechanism, it is difficult to apply international and foreign experiences to Vietnam Chapter THEORETICAL MATTERS ON SOE GOVERNANCE AND ON LAW ON SOEs 2.1 Theoretical matters of SOE governance 2.1.1 Overview of corporate governance 2.1.1.1 Concept of corporate governance: The concept of corporate governance so far being considered the most specific, most comprehensive and most widely used by various countries is the concept defined by G20 / OECD (2015): 2.1.1.2 Principles of corporate governance: Until now, OECD's principles of enterprise governance are still widely applied in member countries Enterprises in general, policy makers and state administration agencies are the targets of OECD's Code of Governance There are six key contents of the corporate governance principles proposed by the OECD 2.1.2 Concept of SOE from a governance perspective 2.1.2.1 The concept of SOE: The most recent and currently applied concept is the concept of SOEs in the Enterprise Law 2014: "State-owned enterprises are enterprises with 100% charter capital 10 owned by the State "[11, Article 4] Thus, SOEs are brought to the original concept with the absolute ownership of state owners 2.1.2.2 Features of SOE: The purposes of the state economic sector in general and SOEs in particular are national socio-economic development goals and policies Means to complete policy objectives are also SOEs and through SOE business activities Thus, the nature of SOEs is that it is both the objective and the way that cannot be separated for the State to fulfil its objectives of stability, balance and development of economy and society On the other hand, the role and concept of SOEs at each time have certain differences However, to agree on how to understand SOEs, it is possible to pick up features that directly affect SOE governance under the current law 2.1.3 Governance of SOE: Principles, contents and requirements on corporate governace in general are theoretically applicable to all enterprises including enterprises with state capital contribution and SOEs - two typical forms because of the participation of State owners First, ensure an effective legal and management framework for SOE; Second, the role of the owner of the State; Third, the relationship of SOEs with related parties; Fourth, transparency and information disclosure; Fifth, the responsibilities of the Members' Council 2.2 Law on SOE governance 2.2.1 The concept and differences of the law on SOE governance in comparison with the general corporate governance law It is possible to generalize the law on SOE governance as the overall principles, statutes and regulations of SOEs on the internal management structure of SOEs and measures to control enterprises to protect interests of the owners, stakehoders, and the whole society Accordingly, the content of the law on SOE governance has 11 certain differences compared to the Law on corporate governance in general due to the differences in nature and operational objectives as well as nature of ownership of this type of enterprise 2.2.2 Content of the law on SOE governance 2.2.2.1 Regulations on governance model and management institutions of SOE: - Regarding governance model; - Regarding management institutions: 2.2.2.2 Law on the operation of the State as a prudent and responsible owner: State activities in the role of active owner and responsibility to ensure effective SOE governance is the content covering many aspects 2.2.2.3 Legislation on SOE relations with its stakeholders: SOEs' stakeholders are organizations and individuals that have rights or obligations directly or indirectly related to that SOEs Therefore, in SOE governance, the stakeholders are considered the most important In addition, "Stakeholders" are also organizations and individuals that have direct or indirect relationships with the enterprises, in some cases related to SOE governance which can creat risks, lack of transparency or harming the interests of SOEs 2.2.2.4 Law on public disclosure and transparency: Law on disclosure and transparency of information focuses on legal-related contents for information to be disclosed, information recommended to be disclosed, and mechanism to ensure the accuracy of information; ensure the regulations on information disclosure and transparency applied to coordinating agencies, owner, and enterprises themselves; ensure compliance with recommended OECD principles on disclosure and transparency 12 2.2.2.5 Legislation on the responsibilities of the Members’ Council: The Members’ Council is the representative of the owner in the SOE appointed by the representative of the owner Therefore, the binding regulations in terms of benefits and responsibilities of the Members’ Council with the State owners in the law on the responsibility of the Members' Council is the content to be focused on Besides, it is necessary to note the contents on: objective and necessary authority to implement the function of strategic orientation and supervision of the Members’ Council 2.2.3 Comparison of governance of SOE with 100% state capital and governance of State enterprises which State holds dominant rights: Firstly, managing 100% state-owned enterprises is the management of single-owned enterprises by the State Second, because it is a single-owned enterprise, it cannot be organized in forms of limited liability companies with two or more members or JSC Third, management of 100% state-owned enterprises “is associated with the accountability of a chain of representative agencies, organizations and individuals” Fourth, separating state ownership from state management functions in 100% state-owned enterprises is sometimes impossible Fifth, in the environment with many incentives, the management of 100% state-owned enterprises is not under pressure of information transparency and disclosure, separating public interests from business activities 2.3 Factors affecting the law on SOE governance The law on SOE governance is governed by many factors, in which, the market economy, the structure of SOE ownership, the subject of SOE governance, culture, business practices and the level of economic integration into international economics are the most powerful factors: 13 Chapter CURRENT SITUATION OF LAWS AND ENFORCEMENT OF LAW ON SOE GOVERNANCE IN VIETNAM TODAY 3.1 Actual state of law on SOE governance 3.1.1 State corporate governance model and SOE governance institutions A State corporate governance model: Enterprise Law 2014 regulates the organizational structure of SOEs and OneMember LLC with 02 operation models and the owner’s representative can choose B Institutions of governance of SOEs: regarding Enterprise Law 2014, it is possible to see advances in SOE governance regulations, especially in terms of titles in the SOE management structure However, due to co-operating under the management model of One-Member LLC, SOEs also have separate regulations in Chapter IV of the Enterprise Law 2014 and other separate legal documents leading to the acquisition the number of regulations on responsibilities and obligations of titles is incomplete, not really clear and reasonable At the same time, the legal position of the components in the 02 operating models of SOEs also has certain differences compared to the regulations for OneMember LLC owned by a non-state organization Namely: Representatives of owners in SOEs: The law provides for: Members 'Council and members of the Members' Council; Chairman of the Members' Council; Company president; The manager responsible for daily activities at SOEs 3.1.2 Regulations on the operation of the State as an enterprise owner: Up to now, the biggest result of the governance framework is the first step to build a legal foundation for the business 14 environment, fair competition between SOEs and enterprises of other economic sectors Directly related to the contents of SOE governance, the legal framework addresses important issues Shortcomings and limitations of the law on SOE owners: First, the current legal regulations on SOE owners have not yet identified ownership functions with other functions, especially the administrative capacity of the State in relation to SOEs Second, there are no regulations allowing creditors to propose the innitiation of procedures for dissolution and bankruptcy of SOEs Third, the legal status of SOEs is equal to other enterprises, the law does not need to create mechanisms that are too specific for SOEs Fourth, the law has not yet separated the responsibility for production, public service provision and other responsibilities of SOEs Fifth, althoughin the general spirit of Vietnamese business law, there is equal in all aspects between SOEs and non-state enterprises, there are still many regulations that are unclear or stipulate in a general way Sixth, the legal mechanism does not ensure fairness in access to financial resources SOE governance in accordance with international practice requires SOEs not to use its relationship with state-owned commercial banks to access financial resources, but to apply a competitive mechanism and pure trade relations 3.1.3 Responsibilities of SOE with its stakeholders: As a One-Member LLC, SOE has full of responsibilities and legal obligations to its customers, partners, and owners (State), with employees as well as social responsibility (CSR) like all other OneMember LLCs, in addition to the specific provisions stipulated in Enterprise Law 2014 Responsibility for stockholders is a content that very few SOEs were interested in, especially SOEs operating in monopoly sectors However, recently, because of the importance of 15 competition in a level playing field, SOEs have become interested in the relationship with related parties 3.1.4 Disclosure and transparency of information: The company must publish periodically on the website of the company and the representative owner of the information required by Law The content of information disclosure specified in the report may include the financial statements of the parent company and the consolidated financial statements Information to be reported and published must be complete, accurate and timely in accordance with law The legal representative or authorized person discloses information The legal representative must be responsible for the completeness, timeliness, honesty and accuracy of the published information 3.1.5 Responsibilities of the Members’ Council in the governance of SOEs: Some important functions of the Members’ Council such as strategic orientation and monitoring in practice have not been effective Some surveys at regular and unexpected meetings of Members' Council in SOEs showed that the content of the meeting was very rarely relating to the long-term development strategy of enterprises but still focused on report quarterly and annual business results; discuss and decide: business operation plan, solutions to problems, personnel issues, investment projects 3.2 Current status of implementation of legal regulations on corporate governance 3.2.1 Regarding models and institutional governance of SOEs: The first issue that has been mentioned for a long time by many legal and administrative researchers is the separation of the ownership function and the state management function in SOEs The second issue related to the above administrative gaps is also an overlap between the management and monitoring contents of various 16 management organs The third issue of weakness in the SOE governance model is that it has not clearly defined the role of the State in SOE governance as well as the determination of the profit targets or public utility objectives of SOEs The fourth issue is that in fact, the State has not yet been able to separate itself from the day-today management of SOEs and allow SOEs to fully self-operate to achieve their defined objectives The fifth issue, the implementation of the rights and obligations of state owners in SOEs is still inadequate The sixth issue, the issue of management, supervision and evaluation of SOEs and implementation of the function of state ownership is inadequate 3.2.2 Responsibilities of SOEs for stakeholders: There are still many standards related to relationships with third parties that have not yet reached, as well as many shortcomings and limitations that need to timely adjustment: First, not respect the rights of stakeholders Second, there has not been a clear and specific report on the relationship with stakeholders Third, there are very few Members’ Councils of SOEs, the Board of Directors of subsidiaries implementing the development, announcement, implementation and propagation of the program to comply with the internal business ethics rules based on national standards, in line with international commitments and application for SOEs 3.2.3 Regarding the level of disclosure and transparency of information: First, the quantity and quality of published information does not meet the requirements of international governance standards Second, the internal audit has not been focused, the efficiency is low, and even being "disabled" in some SOEs Third, the independent auditing of SOEs is now very weak Fourth, the communication between SOEs and state owners does not run 17 regularly Fifth, sanctions for SOEs and representative organs that fail to comply with the requirements of public disclosure are mainly common administrative sanctions 3.2.4 Regarding the powers and responsibilities of the Members' Council: Although the Members’ Council is the representative of the owner in the SOEs, the representative of the owner decides to appoint, but in essence, they, together with executive department, are labors They both are not managing their own capital, so there is not much binding on the interests and responsibilities of the owner Even, instead of implementing the monitoring function, the Members’ Council can abuse its powers to collude and cooperate with executives in order to "make their own benefits and empty the SOEs” Chapter VIEWPOINTS AND SOLUTIONS TO COMPLETE THE LAW AND IMPROVING THE LEGAL EFFICIENCY OF SOE GOVERNANCE IN VIETNAM TODAY 4.1 Viewpoints to improve the law on SOE governance 4.1.1 Completing of the law on SOE governance should be in line with the development trend and the orientation and roadmap of market and economic reforms of the Party and State: The law on SOE governance therefore needs to be consistent with those political and institutional premises to contribute to the successful implementation of restructuring, ensuring the role of SOEs in the market economy and in international economy integration However, due to inadequate political, institutional and legal premise resulting from the implementation of the divestment plan so far, the results have been 18 limited, especially for non-core divestments of SOEs 4.1.2 Completing the law on SOE governance must approach international standards and practices, especially from the developed industrial countries that are members of OECD: More than ever, the experience and advantages of the Corporate Governance in general, the governance of SOEs in particular in the world (especially the principles of OECD on SOE governance) applied in accordance with the economic conditions of Vietnam is a tremendous step necessary to improve the law on SOE governance, creating a clear change in governance capacity and operational efficiency of SOEs 4.1.3 Completing the law on SOE governance should be associated with the process of completing and amending the law on enterprises, completing market economy institutions: With 02 chapters in Enterprise Law 2014 (chapter III, Chapter IV) and related documents compared to modern governance requirements are still not sufficiently legal basis for Vietnam's SOE governance to catch up with advanced management standards and practices in the world In addition, until now, there are no strict regulations on SOE governance, especially the set of SOE governance principles in line with economic conditions and SOE specific characteristics on the basis of compatibility with principles and requirements of modern governance 4.2 Specific solutions to complete the law on SOE governance: 4.2.1 Ensuring the consistency, synchronization and transparency of the law on SOE governance: Unity, synchronization and transparency of SOE governance law means ensuring a solid legal foundation for SOEs to operate in an equally 19 competitive business environment like other private enterprises and create a basis improve the reality of credit institutions in SOEs However, with the current status of SOE governance law and the requirement of compatibility with OECD standards, to ensure consistency, synchronization and transparency, specific solutions need to be implemented 4.2.2 Completing laws to ensure the State is a real and responsible owner: In order to become the real and responsible owner in the process of realizing its ownership functions, the State should have specific and detailed governance rules and regulations and be consistent with the governance standards of OECD recommendations 4.2.3 Completing legal provisions on SOE responsibilities in relation to related parties In Vietnam, there are quite a few standards on the relationships with third parties (especially the customers, creditors, co-owners in the subsidiaries of SOEs) as well as numerous shortcomings and limitations in regulations need to be adjusted promptly The specific solutions are proposed as follows: First, the law needs to supplement more coherent regulations on conditions to ensure the respect of the rights of parties involved in SOE operations; Second, continue to improve regulations on communication activities, reporting to related parties Third, it is necessary to develop and promulgate specific guidelines on internal rules applicable to SOEs that meet the national and international standards 4.2.4 Completing the regime of information disclosure and transparency in the law on SOE governance: The shortcomings and limitations lead to a lack of information transparency and disclosure of the 20 Vietnamese SOE system not only fall upon the responsibility of SOEs and managing organs, but also due to legal regulations The law is not strong enough, not specific and not yet feasible Therefore, it is necessary to have new solutions for the process of completing the law on information transparency and disclosure of the SOE system 4.2.5 Completing legal regulations to maximize operational efficiency of and prevent the possibility of abuse of the Members’ Council and managers power in SOE governance: In this aspect, the empowering of additional rights autonomy for Members’ Council does not come with the adequate monitoring regime, it is very easy to abuse the Council's powers in the process of implementing responsibility for SOEs Therefore, it is always necessary to have legal and enforcement measures to prevent the risk of abuse of the Members’ Council powers and ensure that the Members’ Council must "operate with integrity and be responsible for the actions of I ”as OECD's recommendation 4.3 Some solutions to improve the effectiveness of law enforcement on SOE governance in Vietnam 4.3.1 Raising awareness of SOE on corporate governance and SOE governance laws: The proper understanding and awareness of SOE governance as well as the law on SOE governance will help governance organs understand the role of corporate governance and the importance of good implementation of SOE governance laws for the performance of SOEs Therefore, it is necessary to focus on training, educating, communicating of governance law on SOE governance for all members of the Members’ Council, members of the Executive Board, the Supervisory Board, the Supervisors in the SOEs, the related parties and whole community 21 4.3.2 Improving capacity, professional qualifications and legal awareness for management and supervision team of SOE The recent typical cases such as the case of Oil and Gas Group investing in Ocean Bank or the previous Vinashin case with huge losses originate from the decisions or the misconduct or recklessness of the leadership Therefore, in order to improve the efficiency of law enforcement of SOE governance, it is important to improve the capacity, professional qualifications and legal awareness for SOE managers and supervisors 4.3.3 Promoting the process of applying international standards on governance of SOE: Promoting the application of modern governance principles is a general trend and is consistent with the current integration process of SOEs which facilitate law enforcement in the country However, it is also important to take into account the general principles applied to many countries with different conditions of implementation and legal regulations such as OECD principles At the same time, these are essentially nonmandatory recommendations, so it is necessary to consider the conditions when applying them to SOEs under Vietnamese law Because there may be incompatible recommendations then it requires flexibility during the application process 4.3.4 Strictly applying sanctions to ensure the punishment by law: The reason for this problem is that the implementation of it for private sector enterprises is not difficult but for SOEs is a big challenge because of its peculiarity SOEs are familiar with the priority and depend on the administrative management of the State and the owner Therefore, the privilege and cumbersome administrative relationships of SOEs with state management agencies, between related interest groups greatly affect the 22 tightening of discipline, causing the sanctions against SOEs are difficult to enforce 4.3.5 Applying science and technology in SOE governance: It can be affirmed that SOEs are the most outdated place in terms of science and technology From science and technology to applied science, technology, production techniques, they have not been able to meet the general development needs of the whole society When modern production lines and modern machinery and equipment have replaced human labor, our country's SOE system is still limited Especially in the SOEs exploiting natural resources and minerals still mainly use human labor which directly affects the output, time and management efficiency of production activities 23 CONCLUDE Through the study of the topic "Law on governance of stateowned enterprises in Vietnam" can draw the following conclusions: First, the development of the theory of SOE governance and SOE management law is important in assessing and proposing solutions to improve the current status of SOE governance laws in Vietnam Second, the Thesis clearly points out the difference between the content of the SOE governance law and the law on the law of the law in general and builds the contents of the law on SOE governance Third, the Thesis also assesses the current status of the legal system on SOE governance, showing that the regulations on SOE governance have built a lot of regulations but still have not met the real requirements The regulations also reveal shortcomings, difficulties to enforce, lack of synchronization, many regulations are incompatible with modern corporate governance practices Especially, the effectiveness of applying SOE governance law into practice is still limited Fourth, in the above-mentioned legal situation, continuing to improve the law on SOE governance is an indispensable and urgent need The goal of completing the law on SOE governance is to build a synchronous legal system, meeting the requirements of practice, in line with the characteristics of the SOE model, compatible with national governance practices and modern economy to promote the core role of SOEs in the state economy In order to achieve this goal, the Thesis proposes views and solutions to contribute to perfecting the legal regulations and improving the effectiveness of law enforcement on SOE governance in Vietnam today 24 ... Vietnamese enterprises and international, Trade and Industry magazine, No.9, June 2018, pages 32-36 PREAMBLE The urgency of the Topic In Vietnam today, corporate governance is a matter attracting... Vietnamese SOEs can apply the OECD model but because SOEs in Vietnam exist in a imperfect market economy mechanism, it is difficult to apply international and foreign experiences to Vietnam Chapter... in Vietnam today The ultimate purpose of the Thesis will be the proposal of appropriate solutions to supplement and improve the legal regulations and enforcement of SOE governance in Vietnam Thereby,