My Trung Industrial Park: backlog of Vinashin

My Trung IP should have been completed in 2017 but remains mostly empty land

So far, creditor SBIC and debtor Hashin Co. JSC and the Nam Dinh People’s Committee have yet to agree on a plan to deal with the long-abandoned My Trung Industrial Park (IP), which would be the key to recover the $23.3 million debt which SBIC lent to Hashin.

The Nam Dinh People’s Committee granted the investment certificate for this IP on December 28, 2006, expecting it to be completed by 2007. After that, Hashin implemented some infrastructure items in the project with the area of 30 ha and attracted 14 secondary contractors.

In 2006, Vietnam Shipbuilding Finance Company (VFC) – a member of Vinashin currently belonging to SBIC – and BIDV lent Hashin $9.6 million in international bonds to construct the infrastructure of My Trung IP which has an area of 150.68ha and the total investment of VND358.6 billion ($15.59 million) in My Trung commune, My Loc district, Nam Dinh.

Previously, Hashin took up a loan from BIDV’s Nam Dinh branch and VFC which it collateralised by mortgaging 12 land plots and one property, handing over the land-use right certificates granted by the Nam Dinh People’s Committee.

According to Nguyen Thanh Dong, acting chairman of the SBIC’s Board of Members, Hashin pledged to mortgage assets, including 12 land-use right certificates. However, as of December 2018, VFC only handed over five of these certificates over the total area of 71.4ha. The rest of the seven certificates, despite being granted by the Nam Dinh Department of Natural Resources and Environment, have not been handed over to VFC to complete the mortgage.

Due to the difficulties in financial resources and the restructuring of Vinashin, the investor stopped the project in 2010. The remaining 80ha has been abandoned since then.

Due to the incomplete investment, My Trung IP cannot produce the revenue Hashin expected. SBIC’s representative also confirmed that besides being unable to repay the debt on time, Hashin’s total debt has reached $23.335 million, including $13.726 million of interest calculated by the last day of July 2018.

According to the Nam Dinh People’s Committee, since 2012, many investors have come to negotiate with Hashin about My Trung IP.

“The negotiations between the parties were unsuccessful, leaving My Trung IP unoccupied for a long time, affecting Nam Dinh’s investment environment,” said Pham Dinh Nghi, chairman of the Nam Dinh People’s Committee.

After many delays, in July 2017, the Nam Dinh People's Committee had to issue Official Letter No.506/UBND-VP5 asking the prime minister to allow Nam Dinh province to handle Vinashin’s debt by revoking My Trung IP and reimbursing Hashin on the basis of the investor voluntarily returning the land to the state.

At the same time, the Nam Dinh People's Committee also proposed the PM to approve the policy to transfer My Trung IP. The new investors will return to Hashin the prescribed costs, which are not lower than the refunding cost appraised by Vinacontral JSC.

Pham Dinh Nghi affirmed that this would be the optimal solution because as the terms of investment certificate have been broken, the Nam Dinh Industrial Park Management Board has enough basis to terminate the project and revoke Hashin’s land-use right certificate.

In addition, since the investor has not completed the infrastructure works according to the investment certificate, the project cannot be transferred to other investors.

The leaders of Nam Dinh province said that the reason for proposing this plan is because My Trung IP project is an asset securing the government loan to Vinashin. Therefore, in order to minimise damage to the state, as well as related parties, Hashin needs to terminate the project and voluntarily return the land to the state. After that, the new investors will have enough legal basis to repay the costs which Hashin invested.

In fact, in June 2017, Nam Dinh Industrial Park Management Board decided to revoke My Trung IP’s investment certificate. At the time of revocation, the Nam Dinh People’s Committee said that there was another investor negotiating with the IP Management Board and relevant credit unions.

The irony is that this solution will be difficult to implement in light of the Ministry of Finance's viewpoint expressed in Official Letter No.7837/BTC-TCND dated June 29, 2018, which stated that in case Hashin has not yet fulfilled its obligations or has not replaced the mortgaged property by other security measures, it has no right to determine the fate of the mortgaged property.

According to VIR’s research, the assets guaranteeing VFC loans have yet to be replaced, so Hashin does not have the right to voluntarily return the project and assets on land as proposed by the Nam Dinh People's Committee.