Investment projects of powerful conglomerates lose trillions of dong

 A series of huge projects developed by economic groups belonging to the Ministry of Industry and Trade (MOIT) have reported losses worth trillions of dong of the state’s money. 

The investment in EVN Telecom is one of the biggest failures sustained by the Electricity of Vietnam (EVN).

The total investment capital EVN poured into EVN Telecom by December 31, 2010 was VND2.442 trillion. However, despite heavy investment, EVN Telecom still saw revenue from product sales and services in 2010 still drop dramatically by 42 percent compared to 2009. 

EVN Telecom made a modest profit of VND93.8 billion in 2008, but the profit dropped to VND8.3 billion in 2009, and then took a loss of VND1.05 trillion in 2010.

A series of huge projects developed by economic groups belonging to the Ministry of Industry and Trade have reported losses worth trillions of dong of the state’s money.

With the huge loss, EVN had to restructure its investment portfolio and sell EVN Telecom to Viettel, the military telecom group.

PetroVietnam, the national oil and gas group, not only had an unsuccessful investment in Ocean Group, but also buried trillions of dong in some projects in its core and non-core business fields.

The giant spent VND7 trillion to build PVTex, a polyester fiber company in the Dinh Vu Industrial Zone in Hai Phong City. It was designed to churn out 500 tons of products a day, using materials from the Dung Quat Oil Refinery and providing materials to the domestic textile industry.

Just after one year of operation, the plant has been left idle, facing closure, while the investor has incurred a loss of VND1.7 trillion.

Vietnam Chemicals Corporation (Vinachem), also a big conglomerate put under the MOIT’s management, has problems related to the VND11 trillion Ninh Binh Fertilizer Plant.

After four years of operation, the plant built by a Chinese enterprise as the EPC (engineering, procurement, construction) contractor incurred a huge loss of VND2 trillion and had to stop operation.

The managers of the plant recently asked the Prime Minister and MOIT for help, asking for tax incentives and preferential land rents to help ease difficulties.

MOIT’s Minister Tran Tuan Anh has said an inspection tour to the fertilizer plant will be taken in June to reassess the technology of using coal to produce fertilizer. Anh has asked to reconsider Ninh Binh’s production and business plan.

The Vietnam Steel Corporation (VnSteel) has become bogged down in the project on expanding the Thai Nguyen iron & steel plant.

The investor chose a Chinese enterprise – MCC – as the EPC contractor to implement the initially estimated VND3.8 trillion project. However, the required investment capital has increased to VND8 trillion. Meanwhile, the Chinese contractor has given up since July 2012.