Politburo to determine restructuring of Vinashin

The Politburo said it will determine how to best stabilize and develop Vietnam Shipping Industry Group, or Vinashin, which is on the verge of bankruptcy, with debts totaling  VND86 trillion (US$4.5 billion), the Politburo concluded in a statement recently.

The Politburo also decided to establish a steering committee in charge of assisting the country’s largest shipbuilder Vinashin to settle its operational and financial problems.

Nguyen Sinh Hung, a Politburo member and Permanent Deputy Prime Minister, heads the Steering Committee, consisting of representatives of relevant ministries, sectors, branches of the Government and a number of Party units.

Vinashin’s achievements

Logo of Vinashin

Established in 1996, the group initially completed important infrastructure facilities that enabled the shipbuilding industry to grow at an annual average growth rate of 35-40 percent from 1996-2006, with a contingent of 70,000 experts and technicians capable of building various types of ships for economic, defense, security purposes and export.

In addition, to date, the company has 28 shipbuilding factories, which produce high quality vessels equipped with advanced technologies.

The group, however, has been facing many difficulties due to mismanagement, weaknesses and serious wrongdoings in recent years.

Reasons behind the Vinashin’s difficulties

Vinashin expanded too rapidly and scattered its investments in ineffective projects; however, the Politburo affirmed that it would determine how to maintain and develop the group’s production and business aims to boost the shipping industry, in order to meet the demands of the national economy, defense and security.

The Politburo said the group’s shortcomings and fault can be controlled and repaired, but if government lacks sensible policies and judicious solutions, the situation may affect credit organizations, transferees and the State budget.

Employees’ job security and salaries of the group also will also likely be affected, said the Politburo.

The Politburo pointed out the reasons behind the group’s struggles. Specifically, the capacity of management was below that which was required for such a large group, its subsidiaries and the leadership acted irresponsibly and unfaithfully, intentionally violating State regulations, and the Prime Minister's rulings on investment projects, capital use and staff appointments, the Politburo said.

In addition, the government’s advisory authorities, localities and central supervision agencies, did not execute their duties in managing and examining the group’s poor performances, said the Politburo.

With 11 checks and audits from 2006-2009, the authorities and agencies failed to discover the group’s serious shortcomings, the Politburo added.

The fact that the establishment of State-owned groups was still in a trial period meant there was no foundation for working out regimes in terms of operation.

Proposed solutions

As a result, the Politburo asked authorities inspect and punish violating individuals in accordance with the law as soon as possible.

The Politburo also asked the steering committee to work out policies and measures to help the group develop its business after stabilizing.

The steering committee will organize activities to inspect the business status of other economic organizations and State-owned groups.

To fix the group’s weaknesses and wrongdoings, the Politburo assigned the Party Delegation of the Government to take the lead in instructing such works as follows:

Promoting Vinashin’s achievements in the past, continuing to affirm the mechanical engineering industry as the major sector of the national strategy on industrialization and modernization, and the shipbuilding and repairing industry as the spearhead sector for the development of maritime economy and the country’s sea strategy through 2020 and the following years.

Vinashin needs to focus on three main fields, including conducting the shipbuilding and repairing industry on a suitable scale, developing an auxiliary industry to serve to shipbuilding and repairing and improving the technical skills of its workers.

Vinashin needs to be restructured immediately to stabilize its production and business and systematically strengthen its trademark to prevent it from going bankrupt and collapsing, as that would have adverse effects on the confidence in the shipbuilding industry’s development, international debt payment, as well as the country’s investment environment.

In dealing with the group’s debts and its increase of charter capital, especially those relating to the State budget, the Political Bureau asked the Government to work out feasible measures in line with Vietnamese and international law, as well as to limit the negative impact felt by employees.
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By Thach Thao - Translated by Ky Linh

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