State firms’ debts edge up, worth 50 pct of assets

By Nguyen Hoai   October 21, 2018 | 10:41 pm PT
State firms’ debts edge up, worth 50 pct of assets
Vietnam Electricity (EVN) owed banks more than VND132 trillion ($5.7 billion), according to the government report. Photo by VnExpress/Anh Tu
State-owned firms saw their debts rise by 1.3 percent last year to reach almost half the value of their total assets.

A new report on the government's investment in state-owned enterprises (SOEs), submitted to the National Assembly, shows that SOEs had racked up VND1,530 trillion ($65.8 billion) in debts while the total assets of the country’s 526 SOEs had increased by 3 percent to VND3,000 trillion ($129 billion). 

The average debt to equity ratio of these companies was 1.25, but there were some with more than 3. 

In this financial year local banks lent over VND486 trillion ($20.89 billion) to the SOEs in 2017, up 4.3 percent from 2016.

They also borrowed VND616 trillion ($26.49 billion) from foreign financial institutions. 

Along with large payables, the corporations also have receivables, which increased 13 percent last year to more than VND409 trillion ($17.58 billion). But of the figure, bad debts account for over VND14 trillion ($602 million).

The business performance of the SOEs was positive last year. Their combined turnover rose 8 percent to over VND1,600 trillion ($68.81 billion), and profit before tax jumped 26 percent to 167.5 trillion ($7.2 billion).

"Basically, the majority of state-owned enterprises retain their equity, except for some companies that have suffered losses,” the report said.

"The efficiency and productivity of some SOEs are limited, not corresponding to how much the government has invested in them. Some projects have also suffered losses."

It emphasized the importance of privatizing and restructuring SOEs, which have been underway for several years now but at a sluggish pace.

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