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More obstacles for VN corporations’ overseas investments

Many overseas projects of Vietnam face difficulties, high risks, and lack of investment efficiency, such as oil and gas exploitation and exploration, rubber planting and processing, and telecom projects.




According to a recent report sent by the Government to the National Assembly, by the end of 2020, the total overseas investment capital disbursed by state-owned and state-invested groups was over 6.71 billion USD (equal to 50% of the registered capital). The Vietnam Oil and Gas Group (PetroVietnam) accounted for the largest amount, with more than 3.97 billion USD, or 59%, followed by Viettel Group with more than 1.45 billion USD or 22%, and the Vietnam Rubber Group (VRG) with 925.8 million USD, equivalent to 14%.

The total capital invested abroad by these three groups made up 95% of the total overseas investment capital of state-owned and state-invested corporations.

Overseas investment projects of Vietnamese enterprises are mainly in the fields of oil and gas, telecommunications; planting and processing rubber; mining; agriculture; construction and installation, commerce and air transportation.

In terms of the number of projects, the field of rubber plantation and processing ranked first with 33 projects, followed by the telecommunications sector with 32 projects, and oil and gas industry with 31 projects.

Regarding investment areas, Vietnamese businesses invested in 26 countries, with the highest number of projects in Cambodia - 41 projects, followed by Laos with 32 projects, Malaysia with 9 projects, Singapore with 8 projects, Russia and Myanmar with 5 projects each, and Peru with 4 projects.

In terms of total accumulated disbursed capital as of December 31, 2020, Cambodia ranked first with 1.002,45 billion USD, accounting for 15%, followed by Peru with 1.002.18 billion USD - 15%, Malaysia with 963.96 million USD - 14%, Russia with 792.73 million USD - 12%, Algeria with 704.71 million USD - 10%.

As of December 31, 2020, 57/131 overseas investment projects of 13 of 28 Vietnamese businesses had revenue, with a total accumulated revenue of more than 3.16 billion USD (including profit of 1.45 billion USD), equal to 47% of the total overseas investment capital.

PetroVietnam accounted for the largest part, with 2.38 billion USD, equal to 60% of the total, followed by Viettel with 706.29 million USD - 49%. These two groups made up 98% of the total revenue of state-owned enterprises from overseas projects.

There are 32 projects did not generate revenue, and 89 projects earned a total revenue of more than 5.54 billion USD in 2020, down 21% compared to 2019.

Twenty-eight projects suffered losses in 2020, totaling 236.89 million. As many as 61 projects earned profit, with a total after tax profit of 426.66 million USD, a reduction of 138.34 million USD year on year. The profit shared in 2020 of Vietnamese investors was 118.76 million USD, down by 87.543 million USD or 42% compared to 2019.

According to the Government's report, in 2020 Vietnam’s overseas projects were heavily affected by the Covid-19 pandemic, resulted in the fall of revenue and profit compared to 2019. The total profit of these projects in 2020 was equivalent to 30% of 2019.

Some inefficient projects in other fields are still operating or being deployed, such as the Potassium Salt Mining Project in Laos, the Establishment of the Cambodian National Airlines Project, and the Steung Treng Mining Project - Cambodia...

The Government has assessed that overseas projects of state-owned and state-invested enterprises have not met expectations.

Besides the problems of management capacity, risk management, market forecasting capacity, and experience in overseas investment, politics and investment policies of the host country, and the impact of Covid-19, have seriously hit Vietnam’s overseas investment projects in 2020.

Luong Bang

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