Automaker to sell plant to repay significant debts.
Last month the General Director of the Xuan Kien Vinaxuki Corporation (Vinaxuki) signed a notice for banks, economic security agencies and its creditors announcing the sale of its Me Linh 1 automotive manufacturing plant to repay loans. The decision was made after Vinaxuki received a notice on its debts from institutions, along with information circulating regarding stolen parts and equipment at the plant.
According to Vinaxuki, all of the plant’s assets are currently used as collateral, including land use rights certificates, buildings, and machinery and equipment. The property is in the process of being transferred or sold to repay loans. The Me Linh 1 plant has only a few employees, mostly providing security.
Vinaxuki President Bui Ngoc Huyen told local media that the biggest problem facing domestic automobile production is a lack of capital and limitations from tax policies. The market price of a domestically-made vehicle is not much cheaper than an imported vehicle.
Mr. Huyen said that the development strategy for this sector provides incentives to assemblers while those in production struggle from a lack of capital.
“From a leading business in promoting the localization of automobile production, the plant was forced to cease operations with debts of up to VND1.2 trillion ($55.8 million) because we did not have enough funds for investment,” Mr. Huyen told local media. “Over the last three years Vinaxuki has had to sell more than 5,000 tons of scrap iron and old machinery in order to pay salaries to our employees.”
It has cut its employee numbers from 1,160 to about 200, including many skilled workers.