In its bid to start operation of the Vietnam’s first debt management company at this stage called Debt and Asset Trading Co. (Datco) scheduled for the second half of this year, the finance ministry has selected South Korea’s Asset Management Co. (Kamco) as a counterpart for technical advisory service for the AMC.
Similarities of Kamco operations with Vietnam’s situation aided the ministry’s selection, according to finance deputy minister Tran Van Ta.
Hopes are high that Datco will be the starting point to take over and trade the huge bad debts owed by state-owned enterprises (SOEs) and state-run commercial banks. Finance minister Nguyen Sinh Hung says this is a reiteration of the ministries stance on the positioning of SOEs and state-run commercial banks.
Kamco has recommended Datco buy back non-performing loans, idle assets of SOEs by either directly buying back or interim buys. The latter is implied as adjustable trading based on predefined criteria.
Initial capitalisation of Datco is envisaged at about 1.1 trillion dong including 500 billion dong borrowed from the World Bank and the rest to be financed by the state budget or raised via government bond issues.
A number of measures to manage and liquidate purchased assets have also been suggested by Kamco. They include debt maturity restructuring, converting debts into equity, long-term bonds, separate auctions or issuing securities based on collateralised assets.
Official finance ministry figures report that by early 2000 non-performing loans owed by SOEs were nearly 32 trillion dong, consisting of about 1.2 trillion dong of overdue receivables and 10.7 trillion dong of payables.
SOEs are reportedly embracing nearly 3.3 trillion dong of unused assets. That is yet to mention 300 billion dong of bad debts and unused assets which have been resolved upon equitisation of 700 SOEs and their subsidiaries.
Official figures released state that state-run banks have more than 23 trillion dong of bad debts of which only 50% are secured.