One-third of State groups face alarming financial woes
By Tu Hoang – The Saigon Times Daily
HANOI – The State-owned economic sector is encountering an increasingly heavy debt burden, with many enterprises falling into a red-alert financial status, according to a report from the Ministry of Finance.
According to a report on last year’s financial situations and business operations of 91 State-owned groups and corporations sent to National Assembly deputies, the total liabilities of State groups and corporations amounted to nearly VND1,300 trillion last year, up nearly 19% from the previous year. Therefore, the average debt-to-equity ratio of this sector was 1.77 last year.
However, there are grave problems found at many enterprises.
The report signed by Minister of Finance Vuong Dinh Hue showed that 30 groups and corporations had the ratio higher than three, with the ratio of over 10 recorded at eight enterprises, 5-10 times at 10 enterprises and 3-5 times at 12 enterprises. This means there were up to one-third of State groups and corporations facing the alarming financial status regarding the debt-to-equity ratio which is considered unsafe if exceeding three times.
The most heavily indebted was Vietnam National Oil and Gas Group (PVN) with the liabilities amounting to nearly VND287 trillion, or roughly US$14 billion, followed by Vietnam Electricity Group (EVN) with over VND275 trillion.
Others facing the alarming woes are Vietnam Industry Construction Group with nearly VND70 trillion, Vietnam National Shipping Lines (Vinalines) nearly VND62 trillion, Vietnam National Coal and Mineral Industries Group (Vinacomin) over VND71 trillion, Vietnam Posts and Telecommunications Group (VNPT) over VND49 trillion, Vietnam Housing and Urban Development Group over VND40 trillion, and Vietnam Cement Industry Corporation over VND28 trillion.
According to the Ministry of Finance, the total asset-to-liability ratio of the State sector was around 1.62 last year.
“This shows that State groups and corporations’ operations depend greatly on loans, resulting in huge financial costs and low solvency,” said the report.
State-owned conglomerates having huge overdue debts were EVN with VND10.15 trillion, PVN with VND1.73 trillion, Vietnam National Tobacco Corporation (Vinataba) with VND467 billion and Civil Engineering Construction Corporation No. 6 (Cienco 6) with VND128 billion.
According to reports of parent companies, the total liabilities are VND606.6 trillion last year, up 22% from 2010.
There are 18 parent companies which had the debt-to-equity ration higher than three times, with five companies having the ratio higher than 10 times.
In addition, the foreign debts of parent companies were VND142.85 trillion, equivalent to 23.5% of the total liabilities and up 14% from 2010. EVN and Vietnam Airlines are two among companies owing huge foreign debts, with VND99.26 trillion and VND24.027 trillion due to investing in power projects and purchasing new aircraft respectively.
Last year, the total amount of collectibles of State groups and corporations were VND296.541 trillion, rising by nearly 14% from the previous year.
State-owned groups and corporations had the total assets worth VND2.09 trillion last year, up 16%, according to the report.
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