Govt to close loss-making state enterprises, overhaul those with potential

The government will close the operations of state enterprises that have proved to be ineffective and unproductive, but will restructure those that have the potential to make a profit.
The plan to modify and reform certain enterprises was reported by Minister of Finance Bounchom Ubonpaseuth when speaking at the National Assembly on Wednesday.

Mr Bounchom Ubonpaseuth.

The government will continue to retain a 100 percent stake in state enterprises that are considered to be of intrinsic value and work with the management to improve their structure and operations, especially in relation to finances, assets, debts, executives and employees, Mr Bounchom said.  
With regard to state enterprises that are considered to be of less importance, the government will attempt to improve their operations but will sell off a partial stake in the business, in order to create confidence among customers.
In seeking to improve these state enterprises, the government will bring in experienced personnel from other businesses and encourage them to source funding and modern equipment in order to build capacity and give the enterprises a competitive edge.
Concerning state enterprises that are unproductive, the government will transfer its full stake to other businesses but will continue to oversee and assess the value of assets and debts and employ financial consultants to help the reform committee tackle the various problems hindering the operations of these enterprises, the minister said.
The government will not retain any ownership of state enterprises that are worthless and will close them down.
Mr Bounchom said that assessments carried out by the reform committee in previous years showed that the business operations of state enterprises in which the government holds a 100 percent stake are weak and carry a high risk of failure in the future.
Joint-venture state enterprises in which the government holds a 50-99 stake are productive.
Joint-venture state enterprises in which the government holds a stake of 49 percent or less are also successful but their finances require close examination to ensure the effectiveness of business operations in the long term, Mr Bounchom said.
There are currently 178 state enterprises, equal to 0.12 percent of the total 148,824 enterprises registered in Laos, of which 96 state enterprises are located in Vientiane and 82 are located elsewhere.
The 178 state enterprises have total registered capital of 28,008 billion kip, equal to 6 percent of the funds held by all total enterprises at 470,906 billion kip, Mr Bounchom said.
The total assets held by state enterprises are valued at 184,765 billion kip, equal to 96.16 percent of GDP, while the value of debt stands at 147,451 billion kip or 76.16 percent of GDP.
The revenue earned by state enterprises averages 31,530 billion kip a year, with a net-profit average of 414 billion kip a year and average annual tax payments to the government of 504 billion kip.
State enterprises have donated funds and equipment for the development of local communities, especially for infrastructure in both towns and rural areas, as a contribution to socio-economic development.

By Times Reporters
(Latest Update June 24, 2022)