The figures were released by Dr. Dinh Tuan Minh at a recent economic forum in southern Ba Ria-Vung Tau province.
According to a State Bank of Vietnam (SBV) report submitted to the National Assembly Standing Committee in September 2012, the bad debt ratio in the whole banking system stands at 10 percent.
The Ministry of Finance’s (MoF) project on SOEs restructuring shows that by the end of 2010, the total bad debts owed by 80 out of 96 State groups and corporations had reached VND827,860 billion or 1.6 times more than their capitalisation. Up to September last year, big SOEs owed more than VND415,000 billion on their bank credit, equivalent to 17 percent of the total bank debt ratio. The outstanding loans of 12 State groups hit VND218,740 billion.
The MoF’s project identifies the biggest debtors as State giants like the Vietnam Oil and Gas Group (PVN) owing VND72,300 billion, Electricity of Vietnam (EVN) Group (VND62,800 billion), and the Vietnam Coal and Mineral Group (Vinacomin) (VND19,600 billion).
Dr Minh said the bad debts of State groups and corporations account for 30-35 percent of total outstanding bank credit.
Dr. Minh cited the SBV’s figures, based on credit organisations’ reports in the first half of this year. He noted that bad debt had increased to 4.6 percent from 3.72 percent in 2011. He warned the real bad debt ratio might even hover around 8.6 percent.
The outstanding debts of credit organizations, Dr Minh said, experienced a sharp rise at the end of 2011, accounting for 11.9 percent of total outstanding loans, up 3.32 percent compared to the previous year, and these outstanding debts would transform into bad debts by the end of the year.
There is growing concern about the rising bad debt ratio in commercial banks which hit 13.36 percent during the last months of 2011. The National Financial Supervisory Committee reported that by the end of last year, the commercial banks made up 61 percent of the whole banking sector’s outstanding debts although only hold 50.64 percent share of the total credit market.
Dr. Minh stressed that the current economic downturn makes it especially difficult to settle bad debts through the sale of assets and State stakes at market prices because most SOEs are dependent on State subsidies to allow for debt removal, debt transference, or increases in capitalisation courtesy of the State budget.
In his opinion, tackling the bad debts of SOEs requires a drastic change in asset trading policy to ensure any chance of success.
He recommended that dealing with bad debts should be combined with promoting public-private partnerships (PPP), restructuring public investment, and reorganising credit organisations.
Dr. Minh argued that Vietnam should not remove SOEs’ bad debts but set up bad debt trading funds and proposed creating a centralised mechanism at the national level with a broad social consensus on guiding principles and strict regulations.
VOV
SOEs make up 70 percent of total bad debts
Bad debts owed by State-owned enterprises (SOEs) are currently estimated at VND200,000 billion (70 percent of the country’s total bad debts), with State groups and corporations accounting for around VND153,000 billion (53 percent).
The figures were released by Dr. Dinh Tuan Minh at a recent economic forum in southern Ba Ria-Vung Tau province.
According to a State Bank of Vietnam (SBV) report submitted to the National Assembly Standing Committee in September 2012, the bad debt ratio in the whole banking system stands at 10 percent.
The Ministry of Finance’s (MoF) project on SOEs restructuring shows that by the end of 2010, the total bad debts owed by 80 out of 96 State groups and corporations had reached VND827,860 billion or 1.6 times more than their capitalisation. Up to September last year, big SOEs owed more than VND415,000 billion on their bank credit, equivalent to 17 percent of the total bank debt ratio. The outstanding loans of 12 State groups hit VND218,740 billion.
The MoF’s project identifies the biggest debtors as State giants like the Vietnam Oil and Gas Group (PVN) owing VND72,300 billion, Electricity of Vietnam (EVN) Group (VND62,800 billion), and the Vietnam Coal and Mineral Group (Vinacomin) (VND19,600 billion).
Dr Minh said the bad debts of State groups and corporations account for 30-35 percent of total outstanding bank credit.
Dr. Minh cited the SBV’s figures, based on credit organisations’ reports in the first half of this year. He noted that bad debt had increased to 4.6 percent from 3.72 percent in 2011. He warned the real bad debt ratio might even hover around 8.6 percent.
The outstanding debts of credit organizations, Dr Minh said, experienced a sharp rise at the end of 2011, accounting for 11.9 percent of total outstanding loans, up 3.32 percent compared to the previous year, and these outstanding debts would transform into bad debts by the end of the year.
There is growing concern about the rising bad debt ratio in commercial banks which hit 13.36 percent during the last months of 2011. The National Financial Supervisory Committee reported that by the end of last year, the commercial banks made up 61 percent of the whole banking sector’s outstanding debts although only hold 50.64 percent share of the total credit market.
Dr. Minh stressed that the current economic downturn makes it especially difficult to settle bad debts through the sale of assets and State stakes at market prices because most SOEs are dependent on State subsidies to allow for debt removal, debt transference, or increases in capitalisation courtesy of the State budget.
In his opinion, tackling the bad debts of SOEs requires a drastic change in asset trading policy to ensure any chance of success.
He recommended that dealing with bad debts should be combined with promoting public-private partnerships (PPP), restructuring public investment, and reorganising credit organisations.
Dr. Minh argued that Vietnam should not remove SOEs’ bad debts but set up bad debt trading funds and proposed creating a centralised mechanism at the national level with a broad social consensus on guiding principles and strict regulations.
VOV
The figures were released by Dr. Dinh Tuan Minh at a recent economic forum in southern Ba Ria-Vung Tau province.
According to a State Bank of Vietnam (SBV) report submitted to the National Assembly Standing Committee in September 2012, the bad debt ratio in the whole banking system stands at 10 percent.
The Ministry of Finance’s (MoF) project on SOEs restructuring shows that by the end of 2010, the total bad debts owed by 80 out of 96 State groups and corporations had reached VND827,860 billion or 1.6 times more than their capitalisation. Up to September last year, big SOEs owed more than VND415,000 billion on their bank credit, equivalent to 17 percent of the total bank debt ratio. The outstanding loans of 12 State groups hit VND218,740 billion.
The MoF’s project identifies the biggest debtors as State giants like the Vietnam Oil and Gas Group (PVN) owing VND72,300 billion, Electricity of Vietnam (EVN) Group (VND62,800 billion), and the Vietnam Coal and Mineral Group (Vinacomin) (VND19,600 billion).
Dr Minh said the bad debts of State groups and corporations account for 30-35 percent of total outstanding bank credit.
Dr. Minh cited the SBV’s figures, based on credit organisations’ reports in the first half of this year. He noted that bad debt had increased to 4.6 percent from 3.72 percent in 2011. He warned the real bad debt ratio might even hover around 8.6 percent.
The outstanding debts of credit organizations, Dr Minh said, experienced a sharp rise at the end of 2011, accounting for 11.9 percent of total outstanding loans, up 3.32 percent compared to the previous year, and these outstanding debts would transform into bad debts by the end of the year.
There is growing concern about the rising bad debt ratio in commercial banks which hit 13.36 percent during the last months of 2011. The National Financial Supervisory Committee reported that by the end of last year, the commercial banks made up 61 percent of the whole banking sector’s outstanding debts although only hold 50.64 percent share of the total credit market.
Dr. Minh stressed that the current economic downturn makes it especially difficult to settle bad debts through the sale of assets and State stakes at market prices because most SOEs are dependent on State subsidies to allow for debt removal, debt transference, or increases in capitalisation courtesy of the State budget.
In his opinion, tackling the bad debts of SOEs requires a drastic change in asset trading policy to ensure any chance of success.
He recommended that dealing with bad debts should be combined with promoting public-private partnerships (PPP), restructuring public investment, and reorganising credit organisations.
Dr. Minh argued that Vietnam should not remove SOEs’ bad debts but set up bad debt trading funds and proposed creating a centralised mechanism at the national level with a broad social consensus on guiding principles and strict regulations.
VOV
