Vinashin’s restructuring is afloat

Can you map out Vinashin’s situation after its restructuring plan was signed by the prime minister on November 18, 2010?  

The Vinashin restructuring plan purposes to maintain, consolidate and develop the shipbuilding industry towards focusing on three fields shipbuilding, ship repairs and the supporting industry development.

Vinashin only holds 42 member companies consisting of seven huge shipbuilding companies, 14 small-medium companies and two joint venture companies, which can build the 150,000 dead weight tonnage ships and repair 200,000 dead weight tonnage ships.

A restructured Vinashin will have VND68 trillion ($3.4 billion) in total assets, VND53 trillion ($2.65 billion) in debt and VND9.615 trillion ($480.75 million) in equity.

The restructuring plan will be implemented from November 2010 to 2013.

What difficulties will Vinashin face?

The Vinashin restructuring plan has faced many disadvantages and challenges.

Firstly, Vinashin must carry out the restructuring, gradual repayments of its debts especially debts from overseas. Vinashin must negotiate the postpone repayment $60 million with Credit Suisse.

Secondly, Vinashin’s shipbuilding orders are few and some factories do not have enough orders for 2011.

Thirdly, Vinashin must prevent a brain drain of its member companies. However, workers’ average salary is only VND2.8 million ($140) per month and 174 factories have to postpone their employees’ salary payments.

Will the Ministry of Transport (MoT) monitor Vinashin’s restructuring plan?

Previously, the MoT’s role was only to contribute ideas to matters which Vianshin’s board submitted to the prime minister, so the MoT’s monitoring role is limited.

In the restructuring plan, the MoT thus must chair, evaluate and submit project planning, target developing, staff organising and investing judgments. It is a difficult task. Personally, shareholders are the best controllers. The government also set a long-term goal to equitise Vinashin. For the time being, Vinashin has to recover and rebuild its brand before implementing further objectives.