Loans for Vietnam's state firms hit $67 billion

October 24, 2016 | 09:23 pm PT
According to a new government report, $15.6 billion of that came from overseas.

More than 100 state-owned enterprises had borrowed VND1,500 trillion ($67 billion) by the end of last year, with a large part coming from overseas creditors, the government said in a new report.

To put that number in perspective, Vietnam’s gross domestic product last year was estimated at $193.6 billion.

Official data show SOEs have borrowed $15.6 billion from overseas, of which more than 60 percent is either official development assistance loans at low interest rates or loans guaranteed by the government.

Statistics show that SOEs make up nearly 40 percent of total investment in the country but contribute only a third of Vietnam’s GDP.

More than 3,000 SOEs “continue to inhale too much oxygen out of the business environment, undermining economy-wide efficiency and crowding out the productive parts of the private sector,” the World Bank said in a report released earlier this year.

In spite of that, the government is still holding a majority stake in most of state-run companies, which have been partially privatized over the past five years, said the report.

The report showed that the state ownership at more than 400 partially-privatized companies is currently at 81.1 percent. For instance, the government’s stake at oil and gas group Petrolimex is 95 percent.

The government sold shares in as many as 508 state-owned enterprises during the 2011-2015 period which has added $34 billion to the nation’s coffers.

After privatization of state-owned enterprises, the state still retained a major stake in 652 companies last year, compared to from 1,500 in 2010.

The World Bank suggested that because Vietnam has “too many” SOEs, the government should only own shares in about 20 parent companies by 2035.

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