SOEs to bravely spend big

According to the Ministry of Planning and Investment (MPI), the existing economic woes would not prevent many state-owned behemoths from pouring heavy capital into new projects in 2013.

Statistics from 78 state-owned groups and corporations showed that they would spend almost VND507 trillion ($24.37 billion) on new investment projects, up 32.4 per cent against last year, the MPI said in a report on state-owned enterprises’ (SOEs) forecast performance in 2013.

The total investment fund of eight economic groups this year would be nearly VND274.3 trillion ($13.18 billion), up 18.4 per cent against last year. Vietnam Post and Telecommunications Group, Electricity of Vietnam and PetroVietnam  will be the biggest investors.

Enterprises under  the Ministry of Industry and Trade (MoIT) will have the biggest investment projects this year (46.6 per cent of the total investments), followed by those from the Ministry of Transport (34.5 per cent).

For instance, the MoIT’s state-run giant Vinatex invested VND811 billion ($39 million) last year in constructing 50 new garment and textile projects and the figure would be nearly tripled to VND2.4 trillion ($115.4 million) this year for production expansion.

“Vinatex’s total revenue and total export turnover for 2013 are expected to grow 12 per cent on-year,” said Vinatex vice director Le Tien Truong.

However, despite these enterprises’ big investment projects this year, the MPI report said: “Like non-state enterprises, SOEs are facing scores of challenges induced by the long-lasting economic difficulties.”

In the middle of last month, the National Steering Committee for Enterprise Renovation and Development told the Vietnamese government that 94 state-owned groups and corporations’ total debt within 2012 amounted to $64.18 billion, equivalent to 47 per cent of Vietnam’s gross domestic product (GDP) last year. Meanwhile, their total profits were VND127.51 trillion ($6.13 billion), down 5 per cent on-year.

Recently, Prime Minister Nguyen Tan Dung told state-owned groups and corporations  to ensure operational effectiveness in 2013.

According to the MPI, last year saw 21 large SOEs reshuffled. Vietnam currently has nine state-run economic groups and 94 state-owned corporations, all of which have yet to be fully streamlined. SOEs are generating nearly 30 per cent of the country’s GDP  and 39.5 per cent of the total industrial production value.