Loss-making projects of Industry and Trade: There is no perfect solution

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Guests at the discussion. Photo: VGP

Many "revival" projects

Speaking at the seminar "Handling weak projects: Lessons and next direction" held on April 5, organized by the Government Portal, Ho Sy Hung, Vice Chairman of the Commission for Management of State Capital at Enterprises, said that regarding the slow progress and inefficient projects of the industry and trade sector, there is a DAP No. 1 – Hai Phong fertilizer plant under the Vietnam Chemical Group (Vinachem) which has basically overcome shortcomings, making production and business profitable.

In addition, there are four other projects and enterprises under the Vietnam Oil and Gas Group (PVN), including: Phu Tho biofuel factory; Binh Phuoc biofuel factory; Dung Quat biofuel factory; Dinh Vu Polyester fiber factory which basically no longer suffer problems with mechanisms and policies under the authority of state agencies.

“These five projects all stick to specific goals, overcome losses, even make profits. Projects that are no longer able to overcome due to reasons such as the products offered are no longer on the market, cannot compete with imported products, financial settlements, capital structure, and the final solution is bankruptcy," said Hung.

From a business perspective, Nguyen Huu Tu, member of Vinachem's Board of Directors, said that Vinachem has four projects, including two urea fertilizer projects with a total capacity of 1.06 million tons; and two DAP complex fertilizer projects with a total capacity of 660,000 tons.

Recently, the Group has implemented cost reduction, reviewed all unnecessary costs and rationalized the production process at all stages.

“The advantage of Vinachem is that there are two nitrogenous fertilizer units producing urea and DAP, so it is easy to compare to give optimal solutions in management and production. In addition, businesses also apply information technology to strengthen governance," Tu said.

Tu added that, in addition to the DAP No. 1 – Hai Phong fertilizer plant, by 2021, the Ha Bac fertilizer project will come into operation for the first time after five years and be profitable; Ninh Binh Fertilizer Project and DAP No. 2 – Lao Cai fertilizer plant project also cut losses of trillions of VND.

Vinachem is continuing to come up with more sustainable conservation plans, preserve state capital, and fulfill other obligations.

Nguyen Hung Dung, a member of the Board of Directors of the Vietnam Oil and Gas Group (PVN), said the public still believes that PVN has five loss-making and weak projects, but in fact, these projects are not entirely PVN's.

For example, in the Binh Phuoc Biofuel Project, PVN only owns 29% of the shares, and the rest is a foreign company holding a controlling stake.

PVN also holds only 35% of shares of Phu Tho Biofuel Factory, and 65% is from outside businesses.

With Dinh Vu Fiber Factory, according to Dung, PVN participates in the investment with the desire to contribute to ensuring the source of yarn for the domestic garment sector. But when investing, due to market difficulties, enterprises were not proactive in the matter of raw materials and markets, so they faced many difficulties.

So far, the project has basically handled the backlog. PVN has also been looking for partners to handle financial issues, and ensure input materials as well as sales of the factory's products.

"The factory operated stably, operating almost all lines, the business started to make a profit even though it was not big. We will actively handle these projects. After that, it is possible to equitize or transfer shares of PVN in this project," Dung said.

Need to be drastic for each project

Phan Duc Hieu, Standing Member of the Economic Committee of the National Assembly, said many loss-making projects in the industry and trade sector have been "revived", creating economic products.

However, there are still projects that are shutting down, causing capital losses and accumulated losses. "With the handling of these projects, I personally appreciate two points, which are positive and effective handling," said Hieu.

Dang Hoang An, Deputy Minister of Industry and Trade, said that in handling projects, there is no perfect solution, only the optimal solution. Issues related to policies and mechanisms have been basically removed, which is also the basis for reporting to the Politburo for the initial handling of projects.

"Currently, a number of projects have really prospered. As Prime Minister Pham Minh Chinh stated, because this situation has been prolonged, it is necessary to find a way to deal with it completely, what can be done must be dealt with completely,” An said.

Phan Duc Hieu said that in the process of solving, it needs to implement the motto of "easy first, difficult later". The National Assembly has issued a Resolution on the implementation of socio-economic tasks for the 2021-2025 period, which cannot be extended.

"The government has a very specific roadmap for this content, it is necessary to be drastic for each project," Hieu said.