Facing consecutive losses, Vinachem calls for help on four projects

	Health of 12 weak projects: NinhBinh Fertiliser Plant still flooded with debt
	Government approves restructuring of Vinachem

Ninh Binh fertilizer factory is one of the loss-making projects that have restructured debt. Photo: Nguyen Thanh

Half a year loss of VND 600 billion

Recently, Vinachem has submitted a report to the State Capital Management Committee on the group's production and business situation. Accordingly, the group's revenue in the first half of the year was estimated at VND23,377 billion, equaling 46.9% of the year plan, down 4.2% compared to the same period in 2018.

The combined profit of the whole group is estimated at only VND40 billion. In particular, four projects of Vinachem are estimated to have lost VND636 billion in the first half, up 14% over the same period last year (DAP-Vinachem reached VND23 billion profit, down 84%; DAP No. 2-Vinachem lost VND114 billion, an increase of 14%; Ha Bac Fertilizer lost VND260 billion, an increase of 53%; Dam Ninh Binh lost VND286 billion, a loss of 44%). The remaining units earned VND674 billion, down 50% compared to the same period in 2018.

Explaining the poor business results in the first 6 months of this year, according to Vinachem the reasons were the US-China trade conflict and China’s depreciation of the Yuan to a record level. This promotes the export of products made in China, competing strongly with the products of the group's units in both domestic and international markets such as rubber products, basic chemicals and fertilizers such as DAP, NPK.

In addition, the domestic market for fertilizer, rubber, battery and detergent products continues to compete fiercely with imports from neighboring countries such as China, Thailand and some other ASEAN countries.

Specifically, the price of caustic soda imported from China led to the price of caustic soda produced domestically falling by 7-18% compared to the first 6 months of 2018. Detergents produced by the group's units have to compete with detergents originating from Thailand with the preferential import tax rate of 0% on sale in Big C, MM Mega Market Vietnam supermarkets (formerly Metro Vietnam) and Family mart – supermarket chains owned by Thai businesses.

In addition, the trade fraud on imported goods reduces the consumption of fertilizer, battery and rubber of Vinachem.

Particularly, four fertilizer manufacturers continue to face difficulties in the expenses of investment loans, especially the sharp increase in costs due to accounting for penalties on interest on late payment. In addition, these units also face difficulties in working capital loans while working capital loan rates continue to be 1-2.5% higher than the market rate.

Lowest loan interest

In order to solve difficulties for the compounded fertilizer production projects, Vinachem requests the State Capital Management Committee to report to the Prime Minister for consideration and decision on solutions to the loans of Vietnam Development Bank for Projects: Ninh Binh Fertilizer Plant, Ha Bac Fertilizer Plant and DAP No. 2 Lao Cai.

Specifically, extending the loan term to 20 years; firstly collecting principal and collecting interest later; not charging overdue interest; balance repayment of principal and interest according to actual cash flow and according to the ratio of medium, long-term capital debt balance of the banks financing the project; unpaid loan interest is balanced to repay in following years.

In addition, the adjustment of loan interest rates for the 5 years from 2019 to 2023 is at 3% per year. From 2024 onwards, loans with interest rates above 8.55% per year adjusted to the State's investment credit interest rates (at the present time of 8.55% per year) and interest debts without installment payments are made in subsequent years.

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With loans from commercial banks, Vinachem proposed that VietinBank, BIDV, and Vietcombank allow projects such as Ninh Binh Fertilizer Plant, Ha Bac Fertilizer Plant and DAP No. 2 Lao Cai to have debt rescheduled; continue to consider and deal with units entitled to support policies such as reducing loan interest rates to the most preferential interest rates and the lowest interest rates.

Vinachem also expects banks to continue lending to working capital companies and maintaining working capital limits to ensure production and business activities.

In addition, Vinachem proposed that the State Capital Management Committee in enterprises continue to report to the Government to speed up the submission to the National Assembly to amend Law No. 71/2014 / QH13 in the direction of bringing fertilizer into the subject of value added tax with the tax rate of 0%-5%.