Vietnam to revamp debt-laden shipbuilder Vinashin

Vietnam will restructure Vinashin, its top shipbuilder, cutting its non-core businesses after the firm was found to be nearly bankrupt, a ruling party commission said.

The case of Vinashin, which followed a pilot scheme to reform state-run businesses, has raised concern over the effectiveness of the reforms, economists have said.

The ruling Communist Party found Vinashin Chair Pham Thanh Binh, who also heads the party chapter at the firm, “irresponsible in the mobilisation, management and use of the state capital, pushing Vinashin to the brink of bankruptcy”.

The Commission for Inspection under the Party’s Central Committee said in a statement Vinashin also made false financial reports to the government in recent years and invested heavily outside its core business which led to bad debt of “tens of trillion dong”.

More than 5,000 Vinashin workers, or nearly 10 percent of the workforce, have lost their jobs and the firm has failed to pay 234 billion dong in salaries and social insurance to workers, the commission said in a statement issued late on Monday.

Vinashin will focus on its core business in ship building and auxiliary industries, and transfer projects in its non-core business to other companies, the government said in a statement last Thursday.

State oil group PetroVietnam and state-run shipper Vinalines will take over some Vinashin projects and assets, Pham Viet Muon, deputy head of the government’s Steering Committee on Enterprises Renovation and Development, told a briefing last Friday.

He gave no timeframe but other state-run media said Vinashin would be divided into three parts by September 30.

Vinashin was the sole recipient of proceeds from the country’s maiden $750 million sovereign bond issue in October 2005. It has invested the funds in building ships and will start repaying the debt from 2012.

The group operated well in 2006-2007, having signed contracts with a value of up to $6 billion, but it ran into troubles in 2008 partly because of the global financial crisis, Muon was quoted by the official Tuoi Tre newspaper as saying on the weekend

Vinashin’s outstanding debt stood at more than 80 trillion dong, part of which will be transferred to PetroVietnam and Vinalines, Muon said.

reuters

Tags: Vietnam shipping industry, Vinashin restructure