Tái cấu trúc các doanh nghiệp nhà nước ngành xây dựng ở Việt Nam – Nghiên cứu từ trường hợp của Tổng Công ty Cổ phần VINACONEX

Thai Nguyen University Southern Luzon State University

Socialist Republic of Vietnam Republic of Philippines

DOCTOR OF BUSINESS ADMINISTRATION

DISSERTATION

CORPORATE RESTRUCTURING

IN STATE-OWNED CONSTRUCTION SECTOR IN VIET NAM:

THE CASE OF VINACONEX CORPORATION

Adviser: Dr. Melchor Melo O. Placino

Researcher: Nguyen Phuc Huong

Researcher ID: SLSU-DBA12009-21

Date of birth: November 30, 1975

Course: SLSU-DBA1 (2009-2013)

Thai Nguyen, November 2013

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ACKNOWLEDGMENT

During completion of this study, the author has received significant support and

collaboration from many organizations and individuals.

First and foremost, I take this opportunity to express my profound gratitude and deep

regards to my guide Dr. Melchor Melo O. Placino from Southern Luzon State University for

his exemplary guidance, monitoring and constant encouragement throughout the course of

this dissertation.

I would like to thank PhD. Nguyen Ngoc Thang from Vietnam National University

Hanoi, Tran Thi Kim Thu - Assoc.Prof. PhD, Head of Faculty of Statistics - National

Economics University and all my best friends who have supported and encouraged to

complete my dissertation.

I have to acknowledge the contributions of my colleagues at subsidiaries of

VINACONEX Corporation in the process of distributing to and collecting questionnaires.

Without this support, I could not have gathered such huge database for research and analysis.

I also thanks go to all Vinaconex leaders, other state-owned enterprises leaders and some

MOC managers.

Special thanks goes to Thai Nguyen University and Southern Luzon State University

for their cooperation in this training program which provides me with an opportunity to

participate in and conduct the project that I have long cherished.

Last but not least, many thanks go to my family. They are always beside me and

encourage me through the duration of my studies. I am also indebted this achievement to my

beloved wife and my children for their great help and support.

Nguyen Phuc Huong, November 2013

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DECLARATION

I, Nguyen Phuc Huong, hereby submit my dissertation for oral examination, entitled

“PROBLEMS AND ISSUES IN CORPORATE RESTRUCTURING IN STATE-OWNED

CONSTRUCTION SECTOR IN VIET NAM: THE CASE OF VINACONEX

CORPORATION”, truthfully declare that the said paper is a product of my original research

investigation.

Signed this 15th November 2013 at Thai Nguyen University.

Nguyen Phuc Huong, DBA candidate

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TABLE OF CONTENTS

ACKNOWLEDGMENT..................................................................................................................... 1

DECLARATION................................................................................................................................ 2

TABLE OF CONTENTS.................................................................................................................... 3

LIST OF TABLES.............................................................................................................................. 5

LIST OF FIGURES ............................................................................................................................ 7

ABSTRACT....................................................................................................................................... 9

CHAPTER I: INTRODUCTION....................................................................................................... 10

1.1. Background of the study.........................................................................................................10

1.2. Problem statement ..................................................................................................................13

1.3. Research Objectives ...............................................................................................................13

1.4. Research Questions ................................................................................................................14

1.5. Hypotheses.............................................................................................................................15

1.6. Scope and Limitation of the Study ..........................................................................................15

1.7. Reseach Definitions................................................................................................................16

1.8. Significance of the Study........................................................................................................17

1.9. Structure of the Study.............................................................................................................18

1.10. Conclusion ...........................................................................................................................19

CHAPTER II: LITERATURE REVIEW........................................................................................... 20

2.1. International related research..................................................................................................20

2.1. National related research ........................................................................................................22

2.3. Theoretical and analysing framework .....................................................................................26

2.4. Analysing framework .............................................................................................................27

CHAPTER III: METHODOLOGY................................................................................................... 30

3.1. Determination of sample.........................................................................................................30

3.2. Research design......................................................................................................................31

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CHAPTER IV: RESULTS AND DISSCUSION ............................................................................... 32

4.1. Overview of the Vinaconex Corporation.................................................................................32

4.1.1. General information......................................................................................................... 32

4.1.2. History of Vinaconex Corporation ................................................................................... 32

3.1.3. Main characteristics of Vinaconex ................................................................................... 34

4.2. General points........................................................................................................................36

4.2.1. Description of respondents............................................................................................... 36

4.2.2. Verification of rating tools............................................................................................... 39

4.3. Analysis on each issue relating to restructuring process ..........................................................39

4.3.1. Reasons for restructuring of SOEs in the construction industry of Vietnam ...................... 39

4.3.2. Competition..................................................................................................................... 42

4.3.3. Strategy ........................................................................................................................... 43

4.3.4. Conflict ........................................................................................................................... 46

4.3.5. Ownership ....................................................................................................................... 49

4.3.6. Leadership....................................................................................................................... 51

4.3.7. Employment .................................................................................................................... 54

4.3.8. Technological Innovation ................................................................................................ 57

4.3.9. Corporate Governance ..................................................................................................... 60

4.3.10. Finance.......................................................................................................................... 62

4.4. Analysis of differences in opinions of staffs at different ages about key issues ........................64

CHAPTER V: FINDINGS, RECOMMENDATIONS, AND CONCLUSIONS ................................ 67

5.1. Findings.................................................................................................................................67

5.2. Implications ...........................................................................................................................69

5.3. Limitation and recommendation for future research ................................................................71

5.4. Conclusion .............................................................................................................................72

REFERENCES................................................................................................................................. 73

APPENDICES.................................................................................................................................. 77

CURRICULUM VITAE ................................................................................................................. 128

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LIST OF TABLES

Table 1: The Workforce of Vinaconex

Table 2: Vinaconex’s contributed capital in subsidiaries and affiliates

Table 3: Vinaconex’s contributed capital in diffirent business sectors

Table 4: Description of respondents

Table 5: Reliability Statistics

Table 6: Reasons for corporate restructuring

Table 7: Opinions of respondents about reasons for restructuring

Table 8: Opinions of respondents about competition during corporate restructuring

Table 9: Opinions of respondents in different job positions about Competition

Table 10: Opinions of respondents about Strategy during corporate restructuring

Table 11: Opinions of respondents in different job positions about Strategy

Table 12: Pearson Chi-Square Tests

Table 13: Opinions about Conflicts regarding corporate restructuring

Table 14: Opinions of respondents in different job positions about Conflict in benefit

Table 15: Pearson Chi-Square Tests

Table 16: Opinion about Ownership in corporate restructuring

Table 17: Opinions of respondents in different job positions about the role of majority

shareholders

Table 18: Pearson Chi-Square Tests

Table 19: Opinions about leadership in corporate restructuring

Table 20: Opinions of respondents in different job positions about the role of shareholders

Table 21: Pearson Chi-Square Tests

Table 22: Opinion about Employment in corporate restructuring

Table 23: Opinion of respondents in different job positions about opportunity to adjust

Personnel

Table 24: Pearson Chi-Square Tests

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Table 25: Opinion about Technological Innovation in corporate restructuring

Table 26: Opinion of respondents in different job positions about Technological Innovation

demands

Table 27: Opinion about Corporate Governance in corporate restructuring

Table 28: Opinion of respondents in different job positions about Corporate Governance

Table 29: Pearson Chi-Square Tests

Table 30: Opinion about Finance in corporate restructuring

Table 31: Opinion of respondents in different job positions about Capital preservation in

enterprises

Table 32: Pearson Chi-Square Tests

Table 33: Average score of different ages in assessment of key issues

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LIST OF FIGURES

Figure 2.1: Kurt Lewin’s Change Management Model

Figure 2.2: An analyzing framework

Figure 4.1: Organization Chart of Vinaconex

Figure 4.2: Age structure based on job position

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LIST OF ABBREVIATIONS

VINACONEX: Vietnam Construction and Import - Export Joint Stock Corporation

VINACONEX-1: Construction Joint-Stock Company No.1 (Subsidiary of VNACONEX

Corporation)

MOC: Ministry of Construction

GDP: Gross Domestic Product

CEO: Chief Executive Officer

SOEs: State Owned Enterprises

CIEM: Central Institute of Economic Management

SPSS: Statistical Package for the Social Sciences

BOM: Board of Managers

PMU: Project Management Unit

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ABSTRACT

The study of corporate restructuring in state-owned enterprises has been the hot topic

in the academic world. However the interests of researchers have focused on investigating the

phenomena of corporate restructuring more in the developed countries than in the developing

world. Little study has been done in investigating the corporate restructuring in state-own

enterprises in Vietnam. This is the first study that devotes to explore the corporate

restructuring in a specific construction company in Vietnam. This study aims to investigate

what problems and issues arise to corporate restructuring in a construction company. A

typical five-level Likert item questionnaire was designed for the data collection. We will

analyze the problems and issues arising from the restructuring in construction sector, and the

social impact of restructuring on the stakeholders. The findings show that majority of

respondents strongly agreed with the reason that the restructuring resulted from their urgent

needs which aimed to help them come out of recession, or avoid bankruptcy. In addition, the

company’s restructuring decision was determined by the company’s internal and external

factors. Vinaconex need to pay more attention to training on management for managers and

carried out technological innovation. From the findings, we proposed some solutions to deal

with problems arising from the restructuring for VINACONEX. The result of study provides

more evidence for the theories about corporate restructuring and contributes to the growing

knowledge in strategic management by using the specific Vietnamese case. In this study, we

also draw some limitations and recommendations for future research.

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CHAPTER I: INTRODUCTION

1.1. Background of the study

Vietnam embarked on the Doi Moi (renovation) policy in 1986. Since then, the country has

experienced radical changes, first and foremost in its fundamental economic thinking. The

centrally planned economy a-la-the Soviet Union was replaced by a market economy, albeit

of a socialist character, which started with a sweeping restructuring of the state-owned sector.

This allowed the private sector to join the economy, which facilitated the process of full

integration into the region and world mainstream. During 20 years of Doi Moi, the gross

domestic product (GDP) of Vietnam has seen sustained growth (Central Institute of Economic

Management, CIEM, 2006). The rate of increase was 8.2 per cent each year on average in the

1991–1995 period, reaching 8.5 percent in 2007 (General Office of Statistics, 2008). The Doi

Moi (renovation), economics growing, competition and globalization along with tightened

fiscal policies are causing both private and public sector Vietnamese enterprises to strive for

greater efficiency and higher cost-effectiveness. In many cases the desired results cannot be

achieved without subjecting the corporate strategy and structure to some transformation. In

this context, restructuring is no longer just an option. It is a necessity for survival and growth

(Cascio, 2002).

The major objective of Vietnam’s reform process is to create a market economy with socialist

characteristics. The enterprise reforms in Vietnam have three main components (Central

Institute of Economic Management, CIEM, 2006). The first component comprises state￾owned enterprises (SOE) privatization and restructuring to alleviate the problems that are

impairing enterprises’ ability to compete. The second component is to improve enterprise

behavior by establishing effective corporate governance mechanisms and strengthening

financial discipline. The third one is provision of supporting institutions and infrastructure

needed for a market based enterprise economy. Key restructuring is the development of social

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benefit programs to deal with the economy adjustments entailed by reforms, allow enterprises

to focus on their commercial objectives and long term strategy.

Economic reform in Vietnam is shaped by several distinctive characteristics, reflecting

policy-imposed constraints and other special characteristics of the economy. First,

characteristic reflects the fundamental policy choice that significant public ownership and

control of industry will be retained. This choice partly explains why enterprise reforms have

been so heavily focused on SOE (CIEM, 2006; Thang & Quang, 2007). Second,

competition is strong in many although not all industries (Martyn, 1995). The economic

behavior of enterprises has become increasingly responsive to market forces as a result of

competition, the growth of non-state enterprises, and management reforms to SOE. The

scope of public ownership has been substantially narrowed in recent years while the scope

for private ownership has been widened. Third, most state-owned enterprises are the

relatively low level of revenues, which are partly a reflection of current structural problems

(Dockery &Herbert, 2000).

Restructuring and privatization are now widely seen as important instruments of

government policy for creating appropriate conditions for enhanced economic growth and

for redefining the role of the State (Cappelli, 1995; Morris et al. 1999; Alkhafaji, 1992).

Many countries in every continent have in recent years embarked on projects to privatize

and restructure their SOEs, including Argentina, Chile and Mexico in Latin America; China,

Malaysia, Pakistan and the Philippines in Asia; the United Kingdom and France in Western

Europe and the transition countries of Central and Eastern Europe; as well as Cote d’Ivoire,

Nigeria and Togo in Africa. Some industrialized countries, including New Zealand and the

United Kingdom, and several developing countries, such as China and Mexico, have

pursued privatization programs that are both radical and ambitious in scale and scope (Jun

Zhao, 2009 Diana et. al, 1998).

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Privatization and restructuring of the SOE sector in Vietnam is intended to concentrate state

ownership and control on a core of large enterprises in strategic industries while withdrawing

state ownership and support from small and medium-sized enterprises. SOE restructuring is

closely linked to the economic restructuring of the enterprise sector as a whole and to

corporate governance reforms (CIEM, 2006). Creation of the strategic core of large SOE

involves their conversion into modern enterprises and the formation of large enterprise groups

that will be able to compete against large foreign multinationals. These groups face important

challenges in overcoming the present problem of their SOE and in sustaining the efficiency

and flexibility that will be needed to compete successfully in international markets.

In Viet Nam, the SOEs are holding a key role in the national economy and is making an

important political mission in the country. SOEs have occupied a big resource of the

economy; however, their contributions to the national economy have been limited in term of

contribution for GDP ratio, offering employment, Factors usage efficiency of production

(land, capital, materials, etc). Specifically, the shortcomings of the SOEs and the need to carry

out necessary restructuring process as follows:

 Effective Business of the SOEs are more and more reduced, the financial situation of

many SOEs are not safe and healthy. Profitability from state capital is limited. Many

SOEs have been latent risk and disruption.

 State policies of investment management have many shortcomings that limited

investment performance of SOEs. Results of SOEs perform tasks are not

commensurable with the scale of resources invested.

 There are too few specific rules, institutions to manage the Group's state economy,

state corporations.