Vinalines still faces stormy seas

>> Vinalines’ losses catch State Inspectorate’s eyes

Ministry of Transport (MoT) figures show that Vietnam’s largest shipping and port operator Vinalines would catch losses of VND692 billion ($33.4 million), while losses at its member firms would reach VND930 billion ($44.9 million) in 2010 based on full financial accounts.

The state corporation incurred further losses of VND623 billion ($30.1 million) in 2011’s first half. Losses after 15 years operating rang alarm bells for the state corporation to embrace business and capital sources restructuring.

MoT chief Dinh La Thang asked the state corporation to quickly divest from its allied firms to focus capital on major investment development projects.

Vinalines reportedly pumped VND3.460 trillion ($167 million) into 53 subsidiary and allied firms, taking the lead in the transport sector with enormous non-core investment amount.

Parallel to $149.7 million put into shipping, seaport and maritime services, and ship repair firms, the state unit injected $17.8 million into securities trading, banking and property areas. For instance, Vinalines has stake in a sequence of firms such as the Capital Securities Joint Stock Company, Vinalines and Vinalines Vinh Phuc real estate joint stock companies and Maritime Bank.

Vinalines got around VND240 billion ($11.6 million) worth in 2010 dividend from these firms, averaging 8 per cent dividend rate per year, according to Vinalines’ general director Nguyen Canh Viet.  

Apart from ineffective outside ventures, Vinalines’ core business lines were also hurt by economic turbulence.

In the seaport field, contrary to expectations its investments into two deep-water port joint ventures in southern Ba Ria-Vung Tau province SP-SPA and Cai Mep International Terminal (CMIT) brought in losses of VND460 billion ($22.2 million) after over a year. In the shipping field, from 2007 until present the corporation poured $1.87 billion into building and procuring 81 ships for its fleet.

In respect to the state liner’s core businesses restructuring, MoT executives demanded Vinalines to shortly review its all investment projects which are either on the development pipeline or in the offing, and place them on a selective basis.

“Focus should only be geared towards Lach Huyen port in the north, Van Phong in the centre and upgrading existing ports in the south,” Thang said.

As for the ship fleet, the MoT requested Vinalines not to buy used ships and concentrate on promoting logistics taking it a breakthrough to development.

Though the deadline for Vinalines to submit it restructuring master plan to the MoT is late November 2011, the state corporation’s top executive said that the MoT gave the green-light allowing it to embark on re-arranging business sections and member firms meeting the conditions from now on.