Vinalines: Still Finding Chances in Crisis

Like any other business entity, the State-owned Vietnam National Shipping Lines (Vinalines) heavily suffered from the global economic recession. However, there are still opportunities in the time of crisis and the shipping corporation has grasped any opportunities to stabilise, develop and “rejuvenate” its ship fleet, accelerate infrastructure construction investment projects and more importantly reshuffle its corporate structure.

Not confining its vision to existing difficulties, leaders of Vinalines proactively sought out opportunities even when the financial crisis was forcing many world-leading corporations to contract operations. Those opportunities were presented on the annual report on production and business activities of the corporation in 2009. To be precise, proper and flexible solutions and policies of the Government helped avert economic recession and business collapse, maintain economic growth, macroeconomic stability and ensure social security.

In addition, the sea-based economy is attached much importance for development and the government has actively participated in multilateral, multi-sector international cooperation in maritime industry, implemented signed conventions, promulgated mechanisms, policies and legal documents related to maritime economic activities, created favourable environment for maritime companies to operate and develop, including Vinalines.

While not a few small businesses only know economic downturn consequences like declining input production costs (interest, fuel, construction materials, labour, ship prices, etc), Vinalines feels that this is the opportunity to focus on mobilising capital sources for intensive investment to create momentum for following development.

“Rejuvenate” ship fleet

According to the development plan, Vinalines would add up a tonnage of 200,000 tonnes to its shipping capacity by building and purchasing used ships. However, taking the advantage of falling ship price, the corporation’s subordinated companies seek capital sources and liquidate their old ships to buy 13 dry-bulk cargo ships and one container ship with a total tonnage of about 320,000 DWT at a total investment of about US$180 million. The corporation was delivered one 22,500 DWT dry cargo ship from Vinashin, bringing the total number of completely built ships to 25 ships with a total tonnage of approximately 319,000 DWT.

Also, the corporation liquidated about 140,000 tonnes of ship loading capacity for buying younger ships.

Thus, atthe end of 2009, the corporation’s total tonnage of the ship fleet reached approximately 2.7 million DWT, accounting for about 45 % of the total tonnage of ships in the country.

Speeding up infrastructure development investment projects

Chosen the investor for national key seaport construction programme, the corporation has proactively prepared and launched two important projects, namely Van Phong international transhipment port and Hai Phong international gateway port.

A number of other projects kicked off previous years ago are also sped up. Specifically, the second phase of Dinh Vu – Hai Phong port project has completed and put into operation piers 3 and 4 with a total length of 450 m and commenced construction on pier 5 with a length of 225 m. The second phase of Cai Cui port project consisted of three wharves with a total length of 500 m, costing VND830 billion. Dinh Vu international container port project was also accelerated. The first phase of Saigon Port – Hiep Phuoc port was started with a capacity of handling about 8.5 million tonnes per year and accommodating vessels of 50,000 DWT and required a total investment of about VND3,700 billion.

SP-PSA international terminal joint venture developed by PSA Corporation in Ba Ria – Vung Tau province; Cai Mep international port project; Saigon Port – SSA international container port project in Ba Ria – Vung Tau developed in cooperation with APMT and SSA; southern Vinalines ship repairing yard; Nosco – Vinalines ship repairing yard; Vinalines Hai Phong container warehouse; Lao Cai inland clearance depot and a series of projects are prepared for investment.

Perfect operating model

Starting being operated in the form of holding company since 2007, the governance of the corporation has been gradually adjusted to fit the new operating model, facilitating its subsidiaries and joint venture companies to boost production and business and promote the efficiency of the State capital. At present, the corporation is managing over VND6,000 billion of State capital in joint ventures, joint stock companies and one-member limited liability companies. In the coming time, Vinalines leaders determined that the parent company needs to continue improving the legal framework to enhance the role and performance of representatives of State equity in its subsidiaries and associated companies. The corporation will rearrange and set up several advisory boards, adjust, supplement and promulgate regulations on internal administration, reform administrative procedures, invest to enhance the performance of production and business management and administration, and create favourable conditions for member enterprises to develop.

In addition to streamlining the working apparatus of the parent corporation, Vinalines is actively reshuffling and changing operating model of its Saigon Port Trading Services Company from a State-owned company to a joint stock one; admitting three ports of Nghe Tinh, Quy Nhon and Nha Trang to be its member enterprises and completing the operating model transformation of its member companies.

Representing the right and interest of members

Beside the role of an organiser and creator of accommodating corridor and assistant of its member units, Vinalines was, last year, a positive representative for the rights and interest of its member units and made worthy contributions to the process of building legal documents to adjust the operation of enterprises in the industry.

The corporation has submitted proposals to the Government and competent authorities for reviewing, building and issuing legal documents, planning and amending policies related to maritime activities such as the Resolution 29/2009/ND-CP dated March 26, 2009 on registration, purchase and sale of vessels, the Decree 09/2009/ND-CP dated May 2, 2009 that promulgates regulations on financial management of State-owned company and management of State equity invested in other enterprises, Circular 18/2009/TT-BTC that instructs the implementation of the 50 % tax cut on value for imported goods including ships; Circular 112/2009/TT-BTC providing value-added tax of 0 % on international shipping, draft decrees on the detained ships, ports management, etc.

Remarking on advantages and disadvantages on the road ahead, Mr Duong Chi Dung, President and General Director of Vinalines, said: Continuing with achievements attained during more than 10 years of operation, especially during the peak from 2006 to 2008 and premises created in 2009, the corporation has firmly entered the so-called golden year, 2010, with the belief that the country will victoriously complete the five-year socioeconomic development plan 2005-2010.

Posted by VBN on Feb 21 2010. Filed under Enterprises. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry