VietNamNet Bridge - To deal with the unprofitable Dung Quat shipyard, MOIT believes that declaring  bankruptcy is the most feasible solution.

MOIT has instructed PetroVietnam to consider three possible scenarios for Dung Quat, the shipyard which has been taking big losses for many years. It will be restructured, or transferred to other owners, or go bankrupt.

Nguyen Hong Nga from the HCMC Economics & Law University believes that the third solution is the most feasible, while the other two are an ‘impossible mission’.

Vietnam doesn’t have a competitive edge in shipbuilding, in either workforce and capital. Restructuring won't help Dung Quat Shipyard. 

Regarding the second scenario – transferring to other investors – Nga believes that it is difficult to find partners who are willing to pour money into it to maintain its operation.

However, analysts said that declaring bankruptcy would be a ‘sensitive’ problem. Sources said that in late 2015, the Ministry of Finance suggested bankruptcy in accordance with the 2014 Bankruptcy Law. 

However, the plan could not be implemented, because ministries feared the bankruptcy might create a bad precedent in Vietnam, especially because there was no decree or circular on procedures for bankruptcy of state owned enterprises.

MOIT has instructed PetroVietnam to consider three possible scenarios for Dung Quat, the shipyard which has been taking big losses for many years. It will be restructured, or transferred to other owners, or go bankrupt.

An analyst warned that it would be a complicated process to declare bankruptcy. 

By March 30, 2016, Dung Quat’s accounts payable had reached VND6.953 trillion, while its total asset was VND5.912 trillion. Even if all the assets can be sold at the book value, Dung Quat will still owe VND1 trillion.

Dung Quat now owes VND3.1 trillion to PetroVietnam. In case the shipyard goes bankrupt, the debt will be irrecoverable, while the chartered capital of VND1.99 trillion provided by PetroVietnam will also ‘vanish into the air’. Besides, 1,300 workers at Dung Quat will become redundant.


In reply, Nga said the loss of the state’s assets was unavoidable. Meanwhile, if the equitization process can be sped up, this will help minimize losses for the state as the owner of the enterprise.

“It is necessary to think about bankruptcy and take cautious steps,” he said.

Do Thai Binh, a respected shipbuilding expert, also thinks it would be better to declare bankruptcy.

“The objective of the development of Vietnam’s shipbuilding industry is inconsistent with Dung Quat’s objective of development. Therefore, letting it go bankrupt is the only solution,” he said.

The expert said that it was an impractical idea to build Dung Quat into a gigantic shipbuilding yard in the region with the capacity of 100,000 tons.

related news

PM approves sale of 70% of Damen Song Cam Shipyard Multi-million dollar speedboat designed by Vietnamese engineers

Mai Thanh