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All state owned businesses will now aim to reduce their management costs by 5-10 per cent from the start of this year’s second quarter.

Many CEOs say that the decision will not only help to raise production and make businesses become more efficient, it will also reduce the burden on the State Budget and create more financial sources that can be invested in social welfare.

The Bao Viet Insurance Group has become the first major conglomerate to carry out its commitment to reduce management costs.

According to Finance Minister Vuong Dinh Hue, this policy will be adhered to amongst all state owned businesses.

Following Bao Viet, the Ministry of Finance will work with the Vietnam Textile and Garment Group (Vinatex), Electricity of Vietnam, the Vietnam National Oil and Gas Group and the Vietnam National Coal and Mineral Industries Group on the issue.

Finance Minister Vuong Dinh Hue said, “In the future, there are plans to include many other groups and instruct them to also drastically reduce costs and improve their management capabilities, including corporations such as Petrolimex.”

The minister noted that the government’s premier task in 2012 is to restructure the economy as well as focus on public investment, state-owned enterprises (SOEs) and the financial system, to increase the efficiency and competitiveness of the economy. More should be done to promote the leading role the state economic sector plays and SOEs must contribute to sustainable economic development.”

Vinatex’s deputy director general Duong Thi Ngoc Dung said that the textiles and garments industry focuses on producing as much as possible while keeping input costs minimal and waste is frowned upon in the sector.

Chairman of Bao Viet Group Le Quang Binh said that his group considers cutting management costs by 5-10 per cent a political duty and plans to slash his group’s management costs by $145 billion will have an big impact on profits.

The success of the Government’s Resolution 1 will not only increase the business efficiency of SOEs but is also of great political significance as it reflects the determination of both government and state owned groups and corporations to restructure and play a key role in the economy.