Vietnam PM orders fix for debt-laden shipbuilder

Vietnam’s prime minister has ordered the restructuring of a troubled state-owned shipbuilding conglomerate that teetered on the edge of bankruptcy earlier this year.

Prime Minister Nguyen Tan Dung officially approved the restructuring plan for Vietnam Shipbuilding Industry Group or Vinashin which aims to return the company to the basics of its mainstay shipbuilding business, according to statement posted on the government’s web site Thursday.

Established in 1996, Vinashin was touted as an example of the ruling Communist Party’s success in liberalising Vietnam’s economy and opening up to foreign investment. Overseas clients queued up to order ships from the company and it aimed to become one of the world’s top shipbuilders while also running businesses from animal feed production to tourist resorts.

But as the company expanded — accumulating nearly 200 affiliate businesses — it amassed large debts that the government has estimated at 86 trillion dong ($4.5 billion) or about 4.5 percent of the country’s gross domestic product last year, including $750 million in international bonds guaranteed by the government.

Seven senior executives including chair Pham Thanh Binh have been arrested since August for alleged mismanagement after Vinashin’s financial problems burst into the open.

The shipbuilding scandal has been extensively covered in Vietnam’s state-controlled media over the past few months.

Last week, a lawmaker in a debate broadcast live on state television called on the rubberstamp National Assembly to set up a commission to investigate whether any Cabinet members were responsible for the company’s losses. The demand was later rejected by the legislature’s standing committee — a group of senior lawmakers.

Under the prime minister’s directive, the company must now only be involved shipbuilding, support industries related to shipbuilding and training of workers for the industry.

Over the next two years, the group’s affiliates will be reduced to 20 and the rest will be sold, wound down or declared bankrupt.

Several affiliates of Vinashin have already been transferred to other state companies including PetroVietnam and the national shipping line. – AP

Tags: Vietnam shipping industry, Vinashin restructure