More state-funded projects continue facing losses

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A real estate project in Hanoi by Thanh An Corporation still delayed

According to the MPI, the list excludes the Ministry of Industry and Trade’s 12 loss-making projects, which have a combined investment of around VND63.6 trillion (USD2.86 billion) announced earlier.

Under the list, the real estate and infrastructure sector has around 20 projects which account for up to VND29 trillion (USD1.31 billion) in total, including projects invested by the Ministry of National Defence’s companies and the Ministry of Transport.
   
The Shipbuilding Industry Corporation (SBIC) and Vietnam National Shipping Lines (Vinalines) are among the Ministry of Transport’s most debt-hit projects. However, the ministry has yet to make a detailed report on SBIC’s ineffective projects.

Several Vinalines’ projects are performing poorly, including Van Phong International Trans-shipment Port in the central province of Khanh Hoa; Cai Cui Port in the Mekong Delta city of Can Tho and a container depot project in Haiphong.

The Ministry of Agriculture and Rural Development has 27 projects worth a total VND909 billion (USD41 million) which show signs of poor investment, including projects by Vietnam Southern Food Corporation (Vinafood 2), Vietnam National Coffee Corporation (Vinacafe), and Halong Fisheries One Member Limited Liability Company.

Meanwhile, Vietnam Posts and Telecommunications Group (VNPT)’s Vinasat-2 with the investment of VND5.4 trillion (USD245 million), which was put into orbit in 2012, has suffered a loss of VND1.2 trillion (USD54 million) from 2012 to 2016.

The ineffective operations and losses of the projects are attributed to weak investor capacity along with the lax management by authorities. 

Out of the 72-project list, 29 projects have faced operational delay; 20 others have failed to meet their designed capacity and or exceeded operational costs; 20 others have seen losses for years and some have been liquidated or seen a change in ownership.

Dr. Luu Bich Ho, former head of the MPI’s Development Strategy Institute, said that state-owned ineffective projects have been warned about on numerous times and for many years. It was important to define the situation of each project.

He noted that it is essential for SOEs to find financial solutions for their projects by themselves, not depend on the state-budget alone. 

Sate management should have detected projects at risk of losses earlier to mitigate the pressure on the state budget, said economist Ngo Tri Long, former deputy head of the Market and Price Research Institute, adding that projects which can’t be saved needed to be liquidated.

Responsibility among the management and supervision agencies must be investigated to find out whether there is any support for the loss-making projects, Long highlighted.

The MPI has also proposed to the government to select private and foreign investors for big infrastructure projects.