Vietnamese shipping companies running massive losses

Vinalines and subsidiaries are deep in the red due to several failed investment projects

Notably, according to the report of the Ministry of Transport (MoT), parent company Vinalines currently has three projects operating with heavy losses.

One is Van Phong International Transshipment Port in the central province of Khanh Hoa. The construction of the VND6.2-trillion ($272.6 million) project was kicked off in October 2009.

According to the plans, the construction project would be divided into four stages with the initial stage to be completed by 2011. However, as reported by the project management unit, the work has stopped since June 2010 after Vinalines paid VND146 billion ($6.4 million) for South Korea-based SK Engineering & Construction in advance.

SK Engineering & Construction, in partnership with Vietnam Waterway Construction Corporation (Vinawaco), are the main contractors for first two jetties. However, the two corporations have purchased 544 steel structures of substandard quality and only finished laying down 114 of the 1,729 structures in total.

The second project is Cai Cui Port located in the Mekong Delta city of Can Tho, representing a total investment capital of VND830 billion ($36.5 million). Starting operations in October 2016, however, to date, the profit of the port’s business operations is much lower than expected.

The third is the container depot project in the northern city of Haiphong with a total investment capital of VND353 billion ($15.5 million). The project has been suffering consecutive losses since it come into operation.

Along with ineffective projects that Vinalines invested in directly, a series of subsidiaries are also flooded in massive losses due to failed investments.

Notably, in 2008, Vinalines Ship Repair Co., Ltd. kicked off the construction of a ship repair complex project in the south with a total investment capital of VND6.49 trillion ($2.85 million). The project is part of the government's master plan on developing the country's ailing ship-repair sector.

According to the directions of the government, as of the end of April, 2017, Vinalines completed the divestment form the ship repair complex. However, to date, Vinalines has only got VND82 billion ($3.6 million) from the divestment.

Bien Dong Shipping Co., Ltd. is another outstanding example, as the company has two ship building projects with a total investment capital of more than VND1.4 trillion ($61.5 million). According to MoT, these two projects have been in the red since 2009, accumulating losses of VND1.61 trillion ($70.8 million).

Regarding SBIC, the company is implementing the restructuring plan according to the prime minister’s decision. So far, specific information about its business and investment restructuring have yet to be released.

Previously, media mentioned delays in the construction of SBIC's South Cam Ranh Industrial Zone (IZ). Having started constructing in 2011, the IZ in the central province of Khanh Hoa was planned to welcome investors and be put into operation by the end of 2011. However, the construction was not implemented on schedule. In May 2017, local authorities warned to revoke the project’s investment certificate due to the long delay.

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