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Many SOEs in the red

Released at: 23:49, 28/08/2016

Many SOEs in the red

Photo: Duc Anh

Report from State Audit Office of Vietnam identifies loss-making State enterprises and others with questionable debts.

by Ngoc Chi

Five of 38 large State-owned enterprises (SOEs) incurred losses in 2014 totaling over VND4 trillion ($180 million) while many other big names have doubtful debts on their books, according to an audit report for 2014 released on August 26 by the State Audit Office of Vietnam (SAV).

According to Mr. Dao Van Dung, Director of SAV’s General Services Department, 2014 saw a slow recovery in the global economy that negatively affected business performance.

The five SOEs are Vinalines, which lost VND3.5 trillion ($157.5 million), TCT 15 Corporation with VND471 billion ($21 million), Vinasugar II with VND15.1 billion ($679,500), the Dak Lak Printing Limited Company with VND2.95 billion ($132,750), and the Vietnam Industrial Construction Corporation (Vinaincon) with VND131 billion ($5.89 million).

Those with doubtful debts included VNPT-Global, Hapro, Vinataba, EVN Northern Power Corporation, EVN Southern Power Corporation and the HCMC Power Corporation under Electricity of Vietnam (EVN), and Pacific Oil & Gas under PetroVietnam.

The report also identified enterprises ineffectively using property after investment, causing capital losses. Some financial investment units were also ineffective and at risk of going bankrupt.

SAV also announced that public debt in 2014 stood at more than VND2,280 trillion ($102.7 billion) but suggested it may be even higher. Public debt as at December 31, 2014 was equal to 58.02 per cent of GDP for the year.

SAV said that the Ministry of Finance, which is in charge of tracking public debt, had failed to provide sufficient documents and evidence for SAV to confirm whether $102.7 billion was the final figure. “Though the audited public debt index was generally in line with the Law on Public Debt Management, its content may have overlapped or failed to fully record all the government’s debts,” Mr. Dung said.

The government in 2014 spent nearly VND250 trillion ($11.2 billion) on its administration, SAV reported. This cost surpassed the budget for investment and development by at least VND910 billion ($41 million), thus failing to follow the principle of balanced State budget expenditure.

Bad debts in the entire credit and banking system as at the end of 2014 rose to VND145.2 trillion ($6.5 billion), a 25 per cent increase against 2013, SAV reported. The State-owned Vietnam Development Bank (VDB) recorded the highest increase in non-performing loans, of 68 per cent.

Bad debts in the sector have only eased a little after plaguing the finance system for years and forcing the government to set up the Vietnam Asset Management Company (VAMC) in 2013.

Credit institutions mostly settle their bad debts by selling them to VAMC but the company’s performance has also been far from impressive.

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