Vietnam state corporations pile up $64 bln in debts

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Workers repair an electric tower in Ha Nam Province south of Hanoi July 19, 2012. A recent report says Electricity of Vietnam is among the state-owned companies with the largest foreign debts.

Vietnam's state corporations accumulated debts of VND1,330 trillion (US$63.84 billion) as of the end of 2012, according to a report issued Wednesday.

The report, by the Steering Committee for Renovating and Developing Businesses, said 73 groups made losses worth around VND2.25 trillion ($108 million) last year alone on revenues of 1,621 trillion.

Their debts increased by 2.3 percent from 2011.

Pham Viet Muon, vice chairman of the committee and also of the Government Office, blamed the debts on companies' high gearing that is a high debt-to-equity ratio.

Their equity increased by just 1 percent last year.

Muon admitted that the financial condition of a large number of corporations is "unhealthy."

Their debts are 1.82 times equity, up from 1.77 times the previous year.

While the rate is still below the permitted threshold, the rates at certain companies have gone beyond that, Muon said. "It is very high for some groups," he said, without mentioning names.

Foreign debts account for more than a fifth of their total debts.

Some of the biggest companies by revenue are the Oil and Gas Group or PetroVietnam, Electricity of Vietnam, fuel retailer Petrolimex, military-run telco Viettel, the Vietnam Post and Telecommunications Group, and Vietnam Airlines.

But the power monopoly and Vietnam Airlines are also the ones with the highest foreign debts.

Muon said 0.4 percent of the companies' overall debts are likely to end up bad, with most of the defaulters being construction companies.

A recent statement by the National Assembly's Economics Committee said however that state groups would default on 11.5 percent of their debts, a figure rejected by central bank governor Nguyen Van Binh.

But Binh did not provide one of his own.

Thoi Bao Kinh Te Saigon Online reported Tuesday that a draft resolution by the Ministry of Investment and Planning requires all state-owned businesses to be more transparent about their financial situation.

Minister of Investment and Planning Bui Quang Vinh said the resolution would force companies to make more detailed disclosures about their financial status and goals than in the past.

Information that needs to be made more transparent include that about their assets, investments, short- and long-term loans, especially large ones, he said.

The companies would be asked to make regular reports on their spending and use of land and natural resources, salaries paid to general directors, and how they employ profits or deal with losses.

If the resolution is approved, all the information will be posted on the ministry's website at www.business.gov.vn.

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