VietNamNet Bridge – A series of Vietnamese-invested projects in Laos and Cambodia are stalling because of the government mandate that state-owned corporations withdraw from non-core business fields.

The Vietnamese government has been fervently pressing state-owned economic groups and general corporations to withdraw the capital they’ve injected in the past into non-core business fields. The businesses have been told to gather their strengths in their major fields of business rather than pour money into sectors about which they have no deep knowledge.

However, the capital withdrawal process has created a dilemma for outward investment projects.

According to the Foreign Investment Agency, the Song Da Corporation is having a tough time because the other shareholders in its Laotian hydropower projects are refusing to make good on their prior commitments of capital.

The shareholders had agreed to contribute funding towards the setting up of Vietnam-Laos Power JSC, in which Song Da Corporation contributes 49 percent of capital, BIDV bank 11 percent, PetroVietnam Finance Corporation 11 percent, BIDV Securities 10 percent and PetroVietnam 10 percent.

The other shareholders, namely Electricity of Vietnam, the Song Da Urban Area Development JSC and PetroVietnam Insurance Corporation, agreed to contribute 2 percent, 6 percent and 1 percent, respectively.

However, the non-Song Da shareholders stopped contributing capital right after they were asked by the government to stop investing in their non-core business fields.

As a result, some projects in Laos, which were already in progress, have been postponed due to the lack of capital, despite trillions of dong disbursed so far. Other projects are being reconsidered and may also be canceled due to a lack of capital.

Appropriate agencies, after some discussions, have proposed that the Prime Minister allow the shareholders of the Vietnam-Laos Power JSC to continue their capital contributions to implement the committed projects.

However, in the current context of the economic downturn, the shareholders do not want to contribute any further capital. This has made Song Da suffer.

The same situation is occurring with MECO, a medical service company, the investor in Cho Ray-Phnom Penh in Cambodia. The first phase of the project was completed, while the first 200 beds have been in service since mid-January. However, some non-MECO shareholders still have not contributed their promised capital.

The problem is that five of the 8 project’s investors are Vietnamese state-owned enterprises. They include the HCM City Finance Company, the Saigon Trade Corporation, Saigontourist, the Saigon Agriculture Corporation and Saigon Construction Corporation.

The government in July 2012 released the Decision No. 929 requesting state-owned enterprises to withdraw their investment capital from non-core business fields prior to 2015.

However, the problem is that the investment projects were registered before the decision was released.

Both the Foreign Investment Agency and the HCM City People’s Committee have proposed that the government allow the shareholders to continue their capital contributions, because the slow disbursement would badly affect the projects’ implementation. Meanwhile, the major investors still have not found other alternative investors.

TBKTSG