Enbattled Vietnam state group Vinashin to become corporation

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The Ministry of Transport has decided to convert debt-laden shipbuilder Vinashin into a corporation from a state group, a model the government had hoped will help make Vietnam's key industries globally competitive.

In a press release October 31, the ministry said the Shipbuilding Industry Corp (SBIC) would be formed by "reorganizing" Vinashin, or the Vietnam Shipbuilding Industry Group, and its subsidiaries.

The government will fully own SBIC's chartered capital of VND9.52 trillion (US$451.5 million).

The new company will have only eight subsidiaries after the sale and bankruptcy of 234 others as mandated by the ministry. No changes will be made to affiliates.

Deputy Minister of Transport Nguyen Van Cong told Thanh Nien that there would be no "big changes" to the board, which would continue  to restructure the company which has run up a $4-billion debt.

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The proposed switch reduces the number of state groups to eight from 11 two years ago.

The country adopted the state group model for major industries in 2005, hoping the conglomerates would become more competitive and profitable globally.

Last year two groups -- the Vietnam Industry Construction Group and the Housing and Urban Development Group became corporations.

Vietnam is in the middle of an economic reform. It plans structural reforms to the state sector in which firms like Vinashin, while having easier access to credit than foreign and domestic private companies, have been blamed for inefficiency in non-core businesses and corruption by officials.

Nine Vinashin executives were jailed last year for mismanaging public resources and almost bankrupting the company in 2010.

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