Over 400 Vietnam state-owned firms dissolved or bankrupt in 2013

January 12, 2014 Leave a comment

Over 400 Vietnam state-owned firms dissolved or bankrupt in 2013

Viet Nam News/ANN, Hanoi | Business | Wed, January 08 2014, 1:10 PM

More than 400 state-owned enterprises (SOEs) in Vietnam declared bankruptcy or were dissolved last year, according to the Ministry of Finance. A report from the ministry said that around 6,400 units last year across the country were restructured, of which 3,659 businesses were recapitalised, while 1,022 companies were restructured into one-member limited companies. Another 380 companies put themselves up for sale.The ministry was quoted as saying by the Viet Nam Education newspaper that 83 out of 91 groups and corporations, excluding 18 corporations under the Ministry of Defence, were set for restructuring.

Prime Minister Nguyen Tan Dung has approved the restructuring plans of 17 businesses, including eight business groups (the Electricity of Viet Nam group, the Viet Nam National Textile and Garment group, the Viet Nam National Coal and Mineral Industries group, the Viet Nam National Oil and Gas group, Viet Nam National Chemical group, the Viet Nam Rubber group, the Viet Nam Shipbuilding Industry group and the military-run telecom group).

Another nine corporations, including the Viet Nam Paper Corporation, the Viet Nam National Tobacco Corporation, the Viet Nam Northern Food Corporation, the Viet Nam Southern Food Corporation, the Viet Nam National Coffee Corporation, the Viet Nam Maritime Corporation, the Viet Nam Aviation Corporation, the Viet Nam Railway Corporation and the Viet Nam Cement Corporation, also received approval for their restructuring plans.

Eight of the 91 units have not yet submitted their restructuring plans to the prime minister.

The ministry noted that the financial situation of several restructured companies had improved. About 85 per cent of the 3,576 businesses that implemented re-capitalisation programmes reported higher revenues, while 90 per cent posted profits. About 86 per cent of these companies also contributed more towards the state budget.

However, the ministry said the preparation and implementation of restructuring plans in term of sectors had fallen below the target.

The number of businesses that are more than 51 per cent owned by the state still account for a high proportion of the companies requiring restructuring.

It added that the slow implementation was because the ministries, localities and groups had not paid adequate attention to the restructuring process. Moreover, they had failed to provide reports on their progress, as a result of which they did not benefit from timely solutions.

A subdued stock market and real estate sector also contributed to the difficulties in the restructuring and the capital divestment (privatisation) process of some companies. The ministry said it would accelerate the re-capitalisation of companies in collaboration with the related ministries to ensure that the process is completed by 2015.

One possible solution is to ensure that the heads of the SOE groups and corporations are required to report on the progress of the restructuring process to the relevant ministry.

The government will review and supplement regulations on the creation, restructuring and dissolution of companies to create a legal framework for the restructuring of wholly state-owned enterprises.

Filed under Macro Trends

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