Increase the autonomy to the DATC

	The register business is excited about increase of autonomy
	Financial autonomy: Empowerment along with management responsibility and accountability
	Promoting mechanisms of assigning task and ordering for public non-business units

Dealing with 90 trillion VND of “debt”

Established in 2003, the DATC has been assigned for being an economic instrument to help the Government implement the goal of promoting equitization in SOEs and state-owned commercial banks. During 15 years of operation, the DATC has traded and settled over 90,000 billion VND of debt and assets, thereby supporting about 3,000 businesses to handle outstanding debts and assets before, during and after equitisation to restructure business recovery.

Thereby, supporting the equitization of dozens of state corporations and restoring production and business for more than 150 SOEs, including Vietnam National Shipping Lines (Vinalines), Vietnam Shipbuilding Industry Corporation (SBIC), Vietnam Coffee Corporation, Central Construction Corporation, Transportation Engineering Corporations 1, 4, 5, 6, 8 (Cienco 1, 4, 5, 6, 8) , Thang Long Construction Corporation, Vietnam Machinery Erection Corporation, Haprocimex Company, Vietnam Northern Food Corporation, Vietnam Tobacco Corporation...

Among them, it’s worth mentioning the case of Silkworm Corporation and Waterway Construction Corporation. The two cases have outstanding debt problems that the Government has over many years directed the treatment, but not successfully.

For the receiving services, the DATC has received and processed outstanding debts and assets, excluded the value of enterprises, to help actively accelerate equitisation of 5,000 billion VND, excluded the value of enterprises for more than 2,600 SOEs to equitize. The company has collected nearly 700 billion VND to the state budget from outstanding debts and assets excluded from equitization value; helped enterprises to clear land for production, removed the financial burden on debts and assets that have been invested inefficiently when making arrangements or transferring ownership, typically for some enterprises, corporations such as Vietnam Dairy Products Joint Stock Company, Vietnam Airlines Corporation, Vietnam Airlines Corporation, Vietnam Export Import and Construction Corporation, Textile Group...

The DATC has also implemented hundreds of debt purchase and sale schemes under the agreement and designation of the Prime Minister to handle the financial restructuring of enterprises and debt recovery. The State Bank of Vietnam (SBV) was able to quickly handle a large amount of outstanding debt, contributing to improving and enhancing the financial capacity of enterprises, enhancing the safety of the banking system.

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Accumulation from 2004 to now, the DATC has restructured 173 enterprises with the investment capital formed from debt transfer into capital contribution of around 1,400 billion VND. Of 173 restructuring enterprises, the DATC has combined to handle debt by tying financial restructuring with corporate governance to transfer ownership for 78 SOEs. The remaining 100 enterprises are restructured finance through debt processing, helping businesses reduce the pressure on finance, reduce costs, gradually restore and stabilize production and business, ensure employment for workers and contribute to the budget.

In 2014, the DATC organized the divestment of 24 enterprises, 18 enterprises in 2015 and 19 companies in 2016. Until the end of 2017, the company has withdrawn investment capital in nearly 70 enterprises with the turnover of nearly 1,200 billion VND. Especially since 2014, the DATC has expanded its debt collection component from foreign banks with debts of up to trillion VND. At the same time, the extension of the debt component is not only SOEs but also enterprises of all economic sectors and large-scale projects.

Despite operating actively and efficiently, some institutional issues are preventing the development of DATC.

Regarding this issue, Mr. Pham Manh Thuong, deputy general director of DATC, stated a problem in reality: A difficult business that needs reconstruction is like a sick body. When having a light sickness, it will need a drug, but when having a heavy sickness, it needs to supplement. Also, restructuring businesses need to have a large amount of capital or new capital to develop.

The problem in the process of rebuilding businesses is that the DATC must seek strategic investors to work together, increasing financial potential. According to Mr. Thuong, this is an effective measure but not always successful. If it is not possible to find an investor, the DATC should be allowed to use their own resources to provide short-term financial support to businesses.

“We have no function for lending like a bank. This is just financial support for enterprises to operate. We have SCIC, businesses that need to deal with bad debt have their information published on SCIC, so when borrowing, a good project is also difficult. No one dares to file a loan with the history of bad debt,” the DATC said.

Not only in SOEs

In order to complete the functions and tasks of the DATC, the Ministry of Finance has finalized a new decree aimed at expanding the scope of its activities, adding a number of functions and tasks to the purchase, sale, debt and assets. There are issues that DATC leaders listed above.

Specifically, the proposed draft Decree allows the DATC to prioritize the purchase and handling of debts and assets of SOEs to orgainize and transfer ownership to support the restructuring process; adds new regulations to comply with some newly promulgated legal documents and the DATC activities (operating in the field of risk business, buying and dealing with bad debts; participating in debt processing, restructuring enterprises with financial difficulties, falling into bankruptcy, requiring diversification methods of debt collection and asset recovery; receiving and handling debts and assets for the State, depending on the SOEs' reorganization and ownership transformation).

In the draft Decree, the Ministry of Finance also added a number of mechanisms that are currently applied to businesses dealing with debt trading and dealing with DATC, such as VAMC (Asset Management Company for credit institutions) such as participating in dealing with bad debts of economic organizations, participating in the formation and development of debt trading market which is organized and managed by the State; support the DATC to receive debts and assets of public non-business units when equitization is implemented in accordance with regulations of the Government.

Overview, the regulations being proposed by the Ministry of Finance will help the DATC to better serve its corporate and corporation needs in assessing the debt situation and negotiating with creditors to solve the outstanding debts in order to speed up the process of SOE reform to reach the Government's objectives soon.

In addition, depending on the economic conditions, the DATC's mission will be expanded. Previously, the focus was on SOEs, but now they are open to all businesses in the economy, including foreign invested enterprises.