Debts of corporations, state run groups rise

Till the end of last December, as reported by the State Bank of Vietnam (SBV), the total debts held by seven corporations including EVN, PetroVietnam, Vietnam Rubber Corp, Vinatex, Vinashin, VNPT and Vinacomin was 128.786 trillion dong, up 20.54 percent over the end of 2007 and accounting for nearly 10 percent of total outstanding loans of credit institutions to the economy.

Some state-run groups with big debts include Electricity of Vietnam (EVN) with 66.764 trillion dong of debt, accounting for 51.84 percent of total debts of seven groups, Vietnam National Oil and Gas Group (PetroVietnam) with 21.477 trillion dong, accounting for 16.67 percent, Vietnam Shipbuilding Industry Group (Vinashin) with nearly 19.885 trillion dong, accounting for 15.44 percent.

Regarding debt quality, total overdue debts of seven corporations till the end of last December was 4.168 trillion, accounting for 3.24 percent of total outstanding debts of seven corporations in credit institutions.

In particular, Vinashin has total overdue debts of 3.812 trillion dong, accounting for 19.17 percent of the group’s total outstanding debts and accounting for 91.4 percent of the total overdue debts of seven groups.

Some corporations such as Sugar and Sugarcane Corp II, Vietnam National Vegetable, Fruit and Agricultural Product Corp, Silkworm and Silk Corp and Vietnam Fisheries Corp carried out the loan guarantee for projects of their member companies without appraising projects and investment efficiency and debt payment plan carefully. So when these members went under bankruptcy, these corporations will have to use state capital to pay debts, which affected badly to the general business and production results.

Statistics showed that during three years from 2006 to 2008, the ratio of account payables on equity of groups and corporations each year was lower than three times. Particularly, in 2006, this ratio was 1.35 times and it was 1.4 times in 2007 and 1.47 times in 2008. Notably, in 18 special groups and corporations, the ratio of total account payable on equity tended to increase but it still remained low. Particularly, in 2006, the ratio was 1.1 times, 1.2 times in 2007 and 1.3 times in 2008.

Many enterprises, especially firms specialising in fields of construction and business and production, business mainly based on loans from banks and appropriation capital while financial structure is unreasonable and easily raises risks on cash flow balance, account payable is much higher than equity. Thus, solvency will not be guaranteed.

In particular, in 2006, there were 38 groups and corporations having a capital adequacy ratio (CAR) of over three times, accounting for nearly 40 percent of total number of groups and corporations and the figures were 31 groups and corporations in 2007 and 2008, accounting for 32 percent of the total groups and corporations.

Till the end of last December, some enterprises that had a high ratio of payable debts on total ownership capital of more than 10 times included Traffic Work Construction Corp I with the ratio of 21.6 times, Lilama 17, 4 times, Traffic Work Construction Corp 4 with 14 times, Thanh An Corp 13.9 times, Vietnam Industrial Construction Corp 12.9 times, Vinaconex 12.2 times, Traffic Work Construction Corp 8 with 12 times, Viglacera 11.3 times and Vinashin 10.9 times.

 

Category: Business