The Ministry of Transport confirmed on July 2 that the Government has intervened to stabilize the Vietnam Shipbuilding Industry Group (Vinashin), which encountered repayment problems during the global financial crisis and lost the confidence of lending institutitons.
According to VnExpress, the ministry’s press release stated that “starting with chartered capital in 1996 of only 100 billion dong (about $70 million), Vinashin has played the key role in Vietnam’s shipbuilding strategy.”
However, the ministry explained, the global financial crisis and economic slowdown since mid-2008 has impacted all fields of life and seriously affected the shipbuilding conglomerate. Vinashin couldn’t obain foreign loans, while some local banks and credit institutions canceled loan commitments.
In addition, many clients facing financial difficulties cancelled their contracts with Vinashin or postponed the time of delivery and payment for ships on order.
The ministry said that Vinashin’s difficulties also traced to were sourced from faulty investment policies and poor project, debt and money management.
On June 18, Prime Minister Nguyen Tan Dung decided to restructure Vinashin. The sprawling conglomerate will be divided into three parts by September 30. A rump group will be managed by Vinashin. Other parts will be transferred to the Vietnam Oil and Gas Group (PetroVietnam) and the Vietnam Shipping Lines Corporation (Vinalines). All three corporations are state-owned enterprises.
“This decision will help Vinashin to cut debt and to have more capital for current shipbuilding projects,” the Transport Ministry’s press release said.
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