The losses incurred by state-owned enterprises (SOEs) from outward investment projects in 2018 reached $367 million, a sharp increase of 265 percent compared with 2017, a report shows.
The government has submitted to the National Assembly a report on investment activities, the use and management of state’s capital in enterprises, and the management of the Business Structuring and Development Assistance Fund in 2018.
By the end of 2018, 19 SOEs and the SOEs where the State holds the controlling stake (more than 50 percent of chartered capital) had made 114 outward investment projects. The major investment fields included telecommunication, oil and gas exploration and exploitation, rubber farming, mining and finance and banking.
Of these, 84 projects brought revenue and profit. The total profits of profitable projects were $187 million, a decrease of 24 percent compared with 2017.
Meanwhile, the total loss in 2018 of unprofitable projects reached $367 million, up by 265 percent over 2017. The projects included Viettel’s ones with the loss of $349 million. Thevprojects of the Vietnam Rubber Group (VRG) incurred the loss of $7.7 million.
|By the end of 2018, 19 SOEs and the SOEs where the State holds the controlling stake (more than 50 percent of chartered capital) had made 114 outward investment projects.|
The government’s report showed that 60 percent of projects in the fields of telecommunication, petroleum trading, oil and gas service, construction and installation and accommodation service made profit. The proportions of projects in the fields of oil and gas exploitation and mining are low, 17 percent and 11 percent, respectively.
In addition, telecommunication, rubber farming and rubber latex processing, and mining are the three fields that have many projects incurring accumulative losses.
The government commented that the revenue and profit growth rates in 2018 from most business fields decreased compared with 2017. The biggest decrease was seen in the mining (27 percent) and petroleum trading (23 percent). This is attributed to the fluctuation of the oil and gas prices in the world market.
The sharpest profit decrease was seen in the telecommunication sector with the loss increase ($349 million). Investors attributed this to the depreciation of the local currency and inflation in the countries where they invest in (Africa, Middle America and Southeast Asia). Thevstiff competition in the telecommunication sector was also a reason.
In rubber farming, the profit also decreased by 40 percent because of the sharp fall of the world’s natural rubber prices and the changes of the investment and land policies in invested countries.
Prior to that, the leaders of the military telecom group Viettel admitted the difficulties caused by exchange rate fluctuations, especially in African market. Meanwhile, some telecom projects are just in the first phase of operation, so they still cannot make profit.
The total registered investment capital of outward investment projects as of the end of 2018 is $12 billion. The three biggest investors include PetroVietnam with $6.7 billion worth of investment capital (56 percent), Viettel with $3 billion (25 percent) and VRG $1.4 billion (12 percent).
News and World Report of the US has ranked Vietnam eighth among 29 best economies to invest in, and first among the Association of Southeast Asian Nations (ASEAN) in the list.
Professor Tran Anh Tuan, a member of the Vietnam National Assembly's Economic Commission, talks to Vietnam Investment Review about how to attract more foreign investment into the country.