Transport firms on a changing road

According to Ministry of Transport (MoT) chief Dinh La Thang, the transport sector would incur its largest shake-up this year with 33 member companies under diverse corporations subject to equitisation, three construction businesses and several units belonging to Vinalines and Vinashin being dissolved.

Particularly, 10 big corporations established under Decision 90 must complete equitising within 2013, including Cienco 1, Cienco 4, Cienco 5, Cienco 6, Cienco 8, Thang Long Construction Corporation, Vietnam Waterway Construction Corporation, Waterway Transport Corporation, Vietnam Auto Industry Corporation and Transport Engineering Design Incorporated (TEDI).

These businesses could not delay shake-up plans as earlier MoT executives had enacted a resolution stipulating the leadership at these companies would incur suitable sanctions, including changes of their current duties, if their businesses failed to complete equitising plans on time.

Of corporations established under Decision 91 which are the backbone of Vietnam’s economy, Vietnam Airlines would be the first business to complete equitising before the end of 2013.  

Thang said streamlining the transport sector businesses was a MoT core task in 2013. Thereby, in parallel to reviewing and amending legal documents under MoT competency to create an enabling business environment the MoT will be working actively with the National Asset Management Company to help would-be-equitised businesses deal with bad debts.

“Businesses needed to rescue themselves through substantial restructuring plans but not with a hostile attitude to MoT instructions,” said Thang.

Scores of businesses in the transport sector are in a critical situation. MoT statistics show that over 7,000 workers in the sector now sit idle, accounting for 8 per cent of total labourers. Transport businesses owe to workers VND204 billion ($9.7 million) in unpaid salaries and VND223 billion ($10.6 million) in unpaid social insurance fees.

Whereas, a MoT Financial Department report reveals together with Vinashin whose equity capital was totally lost on the back of underperformance, Vinalines bore huge losses.

Losses of parent company Vinalines alone in 2012 might exceed VND2,400 billion ($116 million) if payment items were fully entered in the accounts.

“From now to 2015, Vinalines will further bog down in losses unless the shipping market would soon recover and credit organisations agreed to reschedule Vinalines’ loans for shipbuilding and purchases,” said Vinalines’ deputy general director Le Anh Son.