SOE divestment leaves Vietnam’s overseas projects in trouble

Thanh Nien News

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Cho Ray - Phnom Penh Hospital in Cambodia / FILE PHOTO
Vietnamese projects in Laos and Cambodia have been delayed and are at risk of being dropped following government-ordered divestment by state-owned enterprises (SOEs) .
Thoi bao Kinh Te Sai Gon (Saigon Times) Online quoted the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment as saying that a number of hydropower projects in Laos had been suspended, despite trillions of dong in investments.
Some others are being re-consideration due to a lack of capital, it said.
The projects were backed by the Viet – Lao Power Joint-stock Company – a joint-venture between Song Da Corporation, a state-owned building group, and other SOEs like the Bank for Investment and Development of Vietnam (BIDV), BIDV Securities Company, the Vietnam National Oil and Gas Group (PetroVietnam), and Electricity of Vietnam.
Except for Song Da, which owns 49 percent of the company’s shares, the other shareholders have ceased contributing to the project due to financial problems caused by the current economic crisis and government divestment orders, according to FIA.
A decree issued in July 2012 ordered SOEs to withdraw investments from non-core business by the following year.
Another doomed project is the Cho Ray – Phnom Penh Hospital in Cambodia, the agency said.
The hospital was principally backed by the Saigon Medical Investment Joint-stock Company (MECO) to mark the friendship between Ho Chi Minh City and Phnom Penh.
It partially opened in January with 200 beds and was expected to expand to 500 beds based on an agreement between the Vietnamese and Cambodian governments.
Five of MECO’s shareholders are pulling out of the project, namely Ho Chi Minh City Finance and Investment State-owned Company, Saigon Trading Group, Saigontourist Holding Company, Saigon Agriculture Incorporated, and Saigon Construction Corporation.
The second stage of the project has been delayed until HCMC authorities can find substitute shareholders, the newspaper reported, adding that some shareholder have yet to fully meet their initial investment committments.
In an effort to save the project, the Ministry of Planning and Investment recently proposed that the government allow the five companies to continue to back the project to ensure the hospital’s operation. It has also asked HCMC People’s Committee to find SOEs with suitable core business interests to replace the departing shareholders.
Although it is necessary and justifiable for the government to order SOEs to divest from non-core businesses and restructure, there should have been solutions for problems that businesses would face, so that important and strategic projects would not be affected, FIA said.

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