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What do you think of the results of handling shortcomings and weaknesses in the ineffective projects and enterprises that are behind schedule?

For 12 ineffective projects and enterprises that are behind schedule, the total investment capital was 64,000 billion VND, an increase of nearly 50% compared to the total initial investment capital. As of 2018, the total debt of the projects was nearly 60,000 billion VND. These are all huge numbers.

The issues of these projects have been raised many times during National Assembly sessions. In 2017, the Politburo directed to definitely handle the 12 projects. The Government set up a steering committee to handle the existing issues of the 12 projects and the Ministry of Industry and Trade also formulated a scheme to solve it simultaneously.

Recently, the Government has demanded the quick resolution to the projects, but in many cases such as Phuong Nam Pulp Mill, the second phase of TISCO’s (Thai Nguyen Iron and Steel Joint Stock Corporation) production expansion project, or Phu Tho bio-fuels ethanol factory, the situation has faced many problems.

The report by the Ministry of Industry and Trade showed that the handling of projects and businesses had achieved positive results. Of six projects that had previously suffered losses, two of them have become profitable, and many others have reduced losses. However, this result has not been assessed, inspected or checked by an objective and independent agency. In my opinion, the Ministry of Industry and Trade has made efforts and achieved good results, but these were limited. In fact, the processing time is very long and no one knows the completion time.

At the request of the Politburo, ineffective projects and enterprises that are behind schedule must be handled by 2020. With the current slow implementation, the set goals are far away.

In your opinion, why is the handling of projects and businesses delayed and not effective as expected?

Referring to causes of the delay, I would like to analyze why these projects fell into the situation of being behind schedule and inefficient.

First of all, these are all public investment projects with many weaknesses from project construction, evaluation to inspection and progress monitoring.

Besides, there are many projects in the field of fertilizer, bio-fuels and shipbuilding which are related to petroleum. When the projects were started 10 years ago, the global oil prices were high. They built a high-priced output. However, the oil prices have dropped sharply by half since 2014, affecting these projects. In addition, the world economy has not prospered, leading to the fall of commodity prices. This made the projects’ original design and the completed ones totally different.

Notably, four of 12 projects have borrowed from Chinese ODA. That means that the project implementation must be received by the China general contractor in the form of "turnkey" with Chinese technology equipment. China contractors are weak, slow and increase capital. In addition, Chinese ODA has a very high interest rate of 3 percent per year, while this number in other countries such as Japan and South Korea is only 1-1.5 percent per year. The China general contractor also charges management fees and commitment fees of 0.5 percent per year, causing capital to rise.

An equally important cause is corruption, wastefulness and loss.

All of the reasons why projects and businesses are behind schedule and ineffective mentioned above are very difficult to handle, causing delays. However, as I said above, the main problem was also the drastic handling.

Many have said there were two main solutions for the 12 ineffective projects and businesses, depending on each project’s characteristics and conditions. First, let the projects go bankrupt, solve them definitely. Second, support the projects, sell the projects, and call for private investors. What is your point of view?

In my opinion, of the 12 projects, there are three that have not finished construction (including the second phase of TISCO’s production expansion project, Phuong Nam Pulp Mill Project and Phu Tho bio-fuels ethanol factory). The most feasible plan for these projects is dissolution and bankruptcy, otherwise their debt will continue to increase.

For the remaining ones, efforts are needed to bring them into production with the support of the State, the divestment of state capital, or calling for private investors. Notably, when calling for private investors, they must accept incentives, such as selling projects with cheap prices, but they still need to control projects to avoid loss of state assets.

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The managing agency of the loss-making projects – the Ministry of Industry and Trade – must join the State Capital Management Committee in enterprises, the Government and the concerned ministries to take concrete and stronger measures, and concentrate resources to avoid greater loss of assets. For example, it is necessary to amend laws to solve difficulties and problems in bankruptcy and dissolution of enterprises. Typically, how the debts of businesses are resolved after dissolution, bankruptcy, whether or not they can be forgiven. The Government must also agree on the viewpoint that the State needs to support and use the budget when necessary. And continue to handle mistakes and corruption. In particular, roadmaps and stronger sanctions are needed to handle these unprofitable projects, avoiding the situation that a deadline was set and then delayed without responsibility from anyone.

Thank you, sir!