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EVN Group’s EVN Telecom got losses of VND4.5 trillion ($225 million) in 2010,
equivalent to the total wage fund of the entire group.
This firm has been transferred to Viettel group.
Of the number, 12 State-owned groups accounted for VND218.7 trillion ($10.9 billion), including VND72.3 trillion ($3.61 billion) of the Vietnam Oil and Gas Group (PetroVietnam) and the Electricity of Vietnam Group (EVN) with VND62.8 trillion ($3.14 billion).
Up to 30 out of 85 State-owned groups and corporations have the ratio of debt/own capital of over three times. That ratio is over 10 times for ten State-owned groups and corporations, such as the Industrial Corporation Group, the Traffic Work Construction Corporations 5, 8 and 1, the Army Petroleum Corporation, Thanh An Corporation and the Highway Development Corporation.
The average loss of SOEs is 12 folds over that of non-State enterprises.
Businesses have to borrow capital for development but at what level and who will bear responsibility? These questions are not answered clearly yet though it is regulated that if SOEs incur losses in two consecutive years, the heads will be dismissed.
Many chairs and CEOs of loss-making SOEs still get promotion or have “safe-landing”. The chair of a State-owned corporation who retired in 2011 is a typical example. This man was the chair and CEOs of the corporation for a dozen years. He was honored as the Hero of the Rovation Period. Until he retired and handed over his position to another official, the fact was out: his corporation owed several trillion dong (millions of USD). That corporation has tens of subsidiaries but for many years, several of them made profit.
Le Van Que, former Chair of the Song Doan Group, also left big debts before he retired in October 2011.
According to financial report 2009, this group owed over VND8.5 trillion ($429.2 million). It maintained operation by loans, including VND4.09 trillion ($204.5 million) of foreign loans, guaranteed by the government.
One year before his retirement, Que was reprimanded for his mistake related to a construction project on Pham Hung road, Hanoi, not for his group’s debts. This man is considered to have a “safe landing.”
The Ministry of Construction recently asked the government’s assistance to pay Song Da Group”s foreign debt worth more than VND3.3 trillion ($165 million), which was used to build Ha Long Cement Factory. This group and the Ha Long Cement JS Company failed to annually pay the debt and interest of Eur15 million. Since this factory began operating in 2009, it always incurred losses.
“In Vietnam, officials of SOEs are the luckiest. They enjoy most favorable conditions, from capital to land, human resources, etc. If they do their job well, they earn a lot of perquisite and get promotions. If their firms incur losses, the state will bear the loss. If their firms go bankrupt, they can still have “soft landing.” Their personal assets are not affected…,” an expert said.
EVN Group’s EVN Telecom got losses of VND4.5 trillion ($225 million) in 2010, equivalent to the total wage fund of the entire group. This firm has been transferred to Viettel group.
Until the huge debt was revealed, EVN”s Chair Dao Van Hung was dismissed. After several months, official punishment on Hung has not been determined.
Dr. Nguyen Dinh Cung, Vice Director of the Central Institute for Economic Management (CIEM), said at a recent seminar that the current management structure of SOEs helps their subsidiaries avoid bankruptcy. SOEs are operating in the mechanism “enjoying profit and passing losses to the state.”
Dr. Nguyen Sinh Cuc from the General Statistics Office said that it is a must to define the masters of State-owed groups. Until now, the masters of the Vietnam Shipbuilding Industry Group (Vinashin) and the Vietnam Shipping Lines Group (Vinalines) have not been defined yet.
Dr. Nguyen Cuc from the Economics Institute said that a major reason for the losses of SOEs is SOEs’ goals are not concretized. In addition, SOEs has many masters.
Tien Phong
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