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Vietnam’s leaders say no rescue for state-run factories with massive losses

By Anh Minh   June 21, 2017 | 01:56 pm GMT+7

The Communist Party’s decision-making body has ordered the trade ministry to quickly end business ventures that are in the red.

Vietnam’s Politburo, the decision-making body of the Communist Party, has ordered the trade ministry to find out why 12 high-profile business ventures, including giant steel and textile plants, have incurred huge losses and who are responsible.

The government will not continue to pour money to cover the losses in these state-run factories, it said in a statement, warning of punitive measures.

A ministry report earlier said that 12 fertilizer, energy, steel, textile and paper plants, including two still under construction, were expected to cost a combined VND43.7 trillion originally. However, the total investment increased by nearly half, to VND63.6 trillion, or $2.8 billion.

Construction on the two incomplete project had been halted due to funding shortages, the report said, noting that for the 10 others, losses had been piling up, reaching VND16.1 trillion ($710 million), estimated at the end of last year.

Within this group of 10, debts had mounted to VND55 trillion ($2.4 billion), or 95 percent of what their assets were valued.

Four plants which had been shut down are Thai Nguyen steel plant in northern Vietnam, Dung Quat and Binh Phuoc biofuel plants in central and southern Vietnam, and Dinh Vu Polyester manufacturing plant in the northern port city of Hai Phong.

Notably, the huge losses at Dinh Vu textile plant, which was shuttered in September 2015, already put five former executives at state-owned PetroVietnam under criminal probe. The fuel giant owned 74 percent stake in the venture established with textile giant Vinatex.

The Politburo said these loss-making projects are an “expensive lesson” in using and managing state resources.