State-owned corporations are sinking deeper into debt and few believe they'll ever see much of that money again, according to a government report.
The most recent government figures submitted to the National Assembly indicate that state-funded companies were VND1.515 trillion (US$71 billion) in the red by the end of last year, up 9 percent from 2012.
The sum amounted to around 1.45 times their equity, the report said.
Nearly VND490 trillion ($23 billion) of the debts were owed to foreign and domestic banks.
The fuel giant Vietnam Oil and Gas Group, better known as PetroVietnam, held the largest portion of bad debt, followed by the monopoly Electricity of Vietnam (EVN), the Vietnam Coal and Mining Group (Vinacomin) and shipping giant Vinalines.
The ironic aspect of all that debt is that it’s held by companies that are reporting record profits.
PetroVietnam and its subsidiaries reported VND23.6 trillion ($1.1 billion) in after-tax profits for the first half of this year in July -- 19 percent beyond the company’s financial projections.
EVN, which hikes its prices several times a year, announced a revenue increase of 19.8 percent in 2013 to VND172.4 trillion ($8.1 billion).
That same year, Vinacomin also reported a VND3 trillion profit, up around 20 percent from the previous year.
Nearly VND326 trillion ($15.24 billion) of the debt was obtained through official development assistance loans backed by a government guarantee.
The report does not specifically explain who holds the remainder of the debt to whom. Experts said it included debt owed to the State Bank and, ultimately, the Vietnamese taxpayer.
The 796 SOEs also have their own debtors, the report said.
Debts owed to them rose 1.6 percent in 2012 to VND298,645 billion (nearly $13 billion) by the end of 2013.
Of that debt, VND10,329 billion ($483 million) or 3.46 percent was described as difficult to recover -- 15.8 percent more than in 2012.
PetroVietnam was owed the largest portion of the distressed debt -- VND2,856 billion ($133.7 million) -- followed by Vietnam Coal and Mining Corporation (Vinacomin) VND890 billion ($41.6 million), the country’s sole airport manager Airports Corporation of Vietnam VND678 billion ($31.8 million), Vietnam Northern Food Corporation VND430 billion ($20.2 million), and the shipping giant Vinalines VND417 billion ($19.5 million).
The government said some companies did not owe much, but were still unlikely to repay large portions of their obligations.
The Vietnam Motor Industry Corporation, for example, is not likely to pay back VND11 billion or 59 percent of its debts.
Also, 59 percent or more than VND29 trillion of debt owed by the Vietnam Tea Corporation was described as "hard to recover."
Several construction corporations were reported to have borrowed amounts equivalent to more than half of their equity.
For example, the Civil Engineering Construction Corporation 8 (Cienco8) has lent more than VND1 trillion or 73 percent of their asset value.
Two Hanoi-based construction companies, Truong Son and Thang Long, has lent 64.7 percent and 58.4 percent of their total equity, respectively.