Speaking at a seminar titled “What should be done for state-owned enterprises to truly drive growth?”, recently organised by Nhan Dan Newspaper, Nguyen Thu Thuy, Deputy Head of the Department for State-Owned Enterprise Development under the Ministry of Finance, said that regarding profit distribution, the Ministry of Finance plans to conduct an initial assessment by the end of 2026 and study and propose a new mechanism during 2027.
Under this roadmap, from the expected date of proposing the mechanism until 2030 — the year by which Resolution No. 79 aims to have between one and three state-owned enterprises ranked among the world's 500 largest businesses — only around three years will remain for implementation. This highlights that, alongside improving institutions and governance mechanisms, the early introduction of policies that encourage enterprise managers based on business effectiveness will be one of the key factors in achieving the targets set out.
Designing the incentives
According to experts, establishing a reward mechanism for profits exceeding planned targets is not merely a remuneration policy but a solution to align the interests of those who create value with the value they generate — a principle widely recognised in modern corporate governance.
The OECD Guidelines on Corporate Governance of State-Owned Enterprises, revised in 2024, regard performance-linked remuneration as good governance practice. They also warn against two extremes: remuneration below market levels makes it difficult to recruit capable personnel, while excessively high remuneration may trigger controversy and create incentives that conflict with the long-term interests of the enterprise. The key is to strike the right balance rather than avoid the issue altogether.
This is also directly linked to the objective set out in Politburo Resolution No. 79, which states that 100% of state-owned economic groups and state-owned corporations should apply corporate governance standards in line with OECD practices by 2030. However, according to many experts, if only the governance framework is adopted while performance-based remuneration mechanisms are overlooked, it would be difficult for these standards to be truly effective in practice.
At the seminar, Dr. Nguyen Tu Anh, Director of Policy Research at VinUni University, argued that the issue of incentives in state-owned enterprises is fundamentally a "principal-agent" problem, which has long been recognised in economics and is common to every economy with a state-owned enterprise sector, not just Viet Nam.
In private enterprises, the link between business performance and the interests of executives is usually established directly through ownership. In state-owned enterprises, that connection must be created through institutions, and as long as those institutions remain incomplete, the gap will continue to exist.
Dr. Nguyen Tu Anh
Director of Policy Research at VinUni University
According to Dr. Nguyen Tu Anh, the link between business performance and the interests of executives is usually established directly through ownership. In state-owned enterprises, that connection must be created through institutions, and as long as those institutions remain incomplete, the gap will continue to exist. This is a technical issue of institutional design rather than a question of personal integrity.
The clearest consequence of an incomplete mechanism is the imbalance between risk and reward. According to his analysis, entering a breakthrough means entering an unclear path; while positive results are not associated with adequate compensation, negative results are accompanied by clear responsibilities. With such a structure, the conservative choice becomes the rational choice.
Dr. Nguyen Tu Anh cited an example from more than a decade ago that, in his view, remains highly relevant today. At that time, a domestic airline anticipated rising fuel prices and therefore used a price hedging instrument by purchasing fuel in advance at a lower price to protect state assets. However, the market later moved in the opposite direction, resulting in losses, and those involved were subsequently disciplined.
"That was market risk, not misconduct. However, the consequences have lasted to this day: other enterprises saw what happened and abandoned the use of such instruments altogether, returning to the safer approach of simply buying fuel at prevailing market prices. A market-based tool disappeared from the decision-making process, not because it was flawed, but because no one wanted to become the next person to bear the consequences," Dr. Nguyen Tu Anh said.
What the new law has addressed
It should be acknowledged that the new legal system on the management and investment of state capital in enterprises, which took effect in August 2025, has brought about significant changes in this direction.
According to the Department of State-Owned Enterprise Development, the requirement to preserve and increase capital is now assessed on the basis of the overall investment portfolio rather than individual projects. This is an important change because the nature of investment is that some projects succeed while others fail, and assessing each project separately is the surest way to suppress the spirit of experimentation. In addition, investment costs for science, technology, and innovation, as well as the costs of carrying out political tasks assigned by the state, are assessed separately and are not included in ordinary production and business performance.
However, these changes are primarily about removing barriers and making it less risky to accept failure. They have not created a driving force. The gap between "not being punished for failure" and "being rewarded for success" remains.
One of the mechanisms currently being studied by managers is a mechanism for sharing profits exceeding the target. China has operated a similar mechanism for state-owned enterprises, with operational guidelines issued by the State-owned Assets Supervision and Administration Commission at the beginning of 2021.
Accordingly, an enterprise and its ownership representative agency agree on a target profit for the financial year. The actual profit exceeding that target is defined as excess profit. From this excess, the enterprise sets aside a pre-agreed proportion to distribute to those who directly contributed to the results.
To ensure objectivity, the target profit is not determined by the enterprise itself but is established on the basis of its development strategy, performance in previous years, and the industry's average profit level, while also not being lower than the industry's benchmark threshold. This rules out the possibility of setting a low target simply to make it easier to exceed.
In addition, the shared amount is paid over three years, with the proportion paid in the first year subject to a limit. This approach requires managers to pay attention to results in subsequent years rather than concentrating their efforts on a single year.
Notably, for technology enterprises, China's guidelines also allow research and development costs to be added back to profit when determining the excess amount, with priority given to technical and research teams in the distribution. In other words, enterprises that invest heavily in research are not disadvantaged when their performance is assessed — a direct approach to addressing the conflict between long-term investment and short-term profit targets.
When motivation comes from elsewhere
There is one case mentioned by all the experts at the discussion, and it illustrates the issue in an indirect but clear way.
Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, cited Viettel as an example of a pioneering role: from a construction and installation unit, it evolved into a telecommunications services enterprise and then into a high-tech industrial enterprise. What he is concerned about is not its size but rather its internal mechanism — the enterprise has successfully linked its mission with the national mission and built a culture and spirit of dedication, thereby partly overcoming the principal-agent problem.
Dr. Nguyen Tu Anh added a second factor, military discipline, while noting that this is something other state-owned enterprises do not yet have.
Viettel's business results in 2025 showed consolidated revenue of more than 223 trillion VND, up 15.2%; pre-tax profit reached 57.688 trillion VND; contributions to the state budget totalled VND 42.290 trillion; and revenue from overseas markets increased by 23.9% — the highest level in nine years.
However, according to the experts, factors such as corporate culture, the spirit of dedication and Viettel's distinctive management characteristics are difficult to replicate through policy. By contrast, a mechanism for rewarding performance above targets can be designed, applied across the board and measured.
Even enterprises that have developed strong internal motivation still need appropriate incentive mechanisms.
Dr. Nguyen Dinh Cung
Former Director of the Central Institute for Economic Management
Nevertheless, according to Dr. Nguyen Dinh Cung, even enterprises that have developed strong internal motivation still need appropriate incentive mechanisms. He said that many successful cases still have considerable room for further development if they are not hindered by institutional barriers. Therefore, these models themselves need to be studied to identify the conditions that underpin success, providing a basis for improving policy, rather than simply making general observations. "There must always be evidence to be convincing," he stressed.
One specific barrier can be identified. The Law on Science, Technology and Innovation allows a significant proportion of profits generated from research results to be set aside as rewards for the authors, however, this mechanism is linked to results that have been commercialised. For research tasks serving national defence and security, which do not generate commercial profits in the conventional sense but require no less expertise and effort, how contributions should be recognised remains an open question.
Under the objectives of Resolution No. 79, Viet Nam aims to have between one and three state-owned enterprises among the world's 500 largest companies by 2030. According to figures cited at a forum in early 2026, the revenue threshold for entering this group is currently around 32 billion USD. Which Vietnamese enterprise can reach this level, and getting close to it within four years will require sustained double-digit growth — something that cannot be achieved simply by relaxing a few more procedures.
The proposed roadmap for introducing the mechanism in 2027 is considered technically appropriate, as time is needed to review practical implementation of the new law. However, even during the research process, several issues need to be clarified, such as what proportion should be set aside for rewards to provide sufficient motivation, and whether the mechanism should be linked to a cost-of-capital threshold in line with international practices rather than being based solely on the assigned profit target.
