Numerous SOEs under special financial supervision

Several of Vietnam's largest SOEs were put under special financial supervision by the State Auditor General

A report submitted by the State Auditor General to the National Assembly has pointed out shortcomings in the management and utilisation of state capital at 235 companies under 36 groups and corporations last year.

These 235 companies showed signs of financial insecurity. Vietnam National Coal and Mineral Industries Holding Corporation Ltd. (TKV) was named first in the report, with 24 subsidiaries on alert, including Vinacomin Environment Co., Ltd., Vinacomin Machinery JSC, Vinacomin-Mong Duong Coal JSC, Vinacomin Halam Coal JSC, and Vinacomin-Vangdanh Coal JSC.

The list contained other big names, including Jetstar Pacific Airlines and Angkor Air under Vietnam Airlines; Ninh Binh Nitrogenous Fertilizer Co., Ltd., Habac Nitrogenous Fertilizer and Chemical Co., Ltd., DAP Vinachem under Vietnam National Chemical Group (Vinachem); or Petrolimex Laos One-member Co., Ltd. under Vietnam National Petroleum Group (Petrolimex).

Additionally, some companies have yet to build internal policies on money management and reported poor performance. Parent companies Vietnam Cement Industry Corporation (VICEM) and Saigon Industry Corporation (CNS) reported VND331.7 billion ($14.4 million) and VND230 billion ($10 million), respectively, in average monthly deposit balance.

Overlapping ownership in enterprises within the same group also remains a persistent issue. The report highlighted that six companies in TKV contributed capital into Vinacomin-Campha Thermal Power JSC, two groups poured money into Vinacomin-Nong Son Coal and Power JSC, and the same status in Housing and Urban Development Corporation (HUD), raising the risk of collusion.

Besides, groups and corporations are too slow to divest from non-core businesses. These include Vietnam National Tobacco Corporation (Vinataba) which has not gotten rid of its real estate and Petrolimex which has not divested its banking arm PGBank.

The State Auditor General also highlighted a lot of violations in investment usage, which caused increasing capital expenses and extending construction times, while some projects cannot even operate. Ethanol Binh Phuoc factory owes VND1.623 trillion ($70.56 million) in principal and interest to various banks (as of the end of 2018).

Some projects have been approved without environmental impact assessment reports or raised total investment by a huge margin, like Bung River 2 hydroelectric project which increased capital by VND2.867 trillion ($124.65 million), while Ban Chat hydroelectric project raised it by VND7.334 trillion ($318.87 million) and Trung Son hydroelectric project by VND1.324 trillion ($57.57 million).