Liabilities of 119 Vietnam SOEs Swell 8% y/y in 2014 to $73 Billion in 2014

Tuan Minh

12:46 26/11/2015

BizLIVE - Total debts of 119 Vietnamese state-owned firms inflated while their earnings slipped.

Liabilities of 119 Vietnam SOEs Swell 8% y/y in 2014 to $73 Billion in 2014

PetroVietnam was the largest debtor of banks at the end of 2014.

Total liabilities of 119 wholly state-owned enterprises (SOEs) in Vietnam increased 8% year-on-year to 1,567 trillion dong (roughly $72.9 billion) as of the end of fiscal year 2014, according to a report of the Ministry of Finance.
The average debt-to-equity ratio was 1.41. However, many SOEs had the indicator exceeding three, which is the safe limit.
Vietnam Machinery Installation Corporation (Lilama) reported a ratio of 11.67 while the respective figures of No.36 Corporation and Song Da Corporation, both major construction firms, were 11.01 and 10.03. A number of military-run firms have the ratio far larger than three.
The 119 state conglomerates incurred a total of 381.42 trillion dong ($17.74 billion) in debt to foreign lenders at the end of 2014.
The government on-lent nearly 118 trillion dong ($5.5 billion) in ODA and guaranteed a total of 124.1 trillion dong ($5.77 billion) worth of foreign debts for SOEs, the report said.
The Tuoi Tre (Youth) newspaper cited Ngo Minh Hai at the Central Institute for Economic Research and Management as saying that the $5.5 billion in foreign debt guaranteed by the government will become public debt if the borrowers fail to settle their liabilities.
The economist reminded of Vinashin, the erstwhile shipbuilding firm that was dissolved over bankruptcy in 2013, after which the government had to repay $211.4 million of its foreign debt.
“Even though state firms have big earnings, the pressure to repay debt is not small and enterprises can easily fall into hardship due to the failure of a few projects,” he warned.
Total assets of the 119 SOEs increased 7% year-on-year to 2,792 trillion dong ($130 billion), of which receivables swelled 11% to 293.62 trillion dong ($13.66 billion).
The ministry’s report showed that the country had 781 wholly state-owned enterprises at the end of 2014, which included eight economic groups and 85 corporations.
Total assets of the 781 SOEs amounted to $144.5 billion as of the end of 2014, representing a 10% year-on-year rise.
Their combined revenues increased 1% year-on-year to $79.5 billion, whereas their pretax profit edged down 1% to $8.73 billion. Their return-on-equity (ROE) ratio was 16% in 2014, sliding from 16.47% in 2013, said the report.