Vietnamese state firms sitting on mountain of rising debt

By Anh Minh   October 25, 2017 | 12:30 pm GMT+7
Vietnamese state firms sitting on mountain of rising debt
Vietnam's energy giant PetroVietnam is among the biggest debtors in the country. File photo

Combined debts at state-owned companies climbed to more than $66 billion last year.

A new government report has revealed that Vietnam's state-owned companies are now in so much debt it accounts for half of their asset value.

State-owned firms owed more than VND1,500 trillion ($66.03 billion) at the end of last year, which was up 3 percent from 2015, said the report filed to the ongoing legislative National Assembly session.

Assets at these companies increased by nearly 4 percent to more than VND3,000 trillion ($122 billion) over the same period, it said.

The biggest debtor was power monopoly Vietnam Electricity, which owed nearly VND487 trillion ($21.5 billion), followed by energy giant PetroVietnam with $15 billion and mining group Vinacomin with $4.4 billion.

Also according to the report, at least 17 state-owned corporations were in the red with combined losses of VND12.5 trillion ($550 million) as of the end of 2016.

The report said that a number of state-owned businesses had been performing badly and their limited contribution to the economy was unworthy of the investment they had received.

It blamed irresponsible management and payment policies for failing to boost productivity.

Privatization at state-owned firms needs to speed up, it said.

Privatization and acquisitions have reduced the number of state-owned enterprises in Vietnam from 6,000 in 2001 to 583 at the end of 2016.

Foreign investors are keeping an eye on the wave of privatizations, and are especially interested in strong performers such as dairy giant Vinamilk and top brewers Sabeco and Habeco.

Vietnam’s Prime Minister Nguyen Xuan Phuc said at a meeting in July that the country will lift restrictions for foreign investors in areas including services, telecommunications, finance and banking, and raise the limit on foreign ownership levels.

Vietnam has set a growth target of 6.7 percent this year.