VietNamNet Bridge – The total debts of 1,300 trillion dong incurred by state owned economic groups and general corporations have been described by the Steering Committee for Enterprise Renovation and Development as “within the safety line.” Meanwhile, economists do not think so.

Mr Le Danh Doanh

The report presented at the meeting between state owned economic groups and general corporations on January 16 showed that the total revenue of the enterprises reached VND1,621 trillion dong, fulfilling 92 percent of the yearly plan, but still 2 percent higher than that of 2011.

The total pre-tax profit of the enterprises was VND127,510 billion, a decrease of five percent from 2011. The ROE (return on equity) was 17.4 percent on average. Especially, 10 economic groups and general corporations had the accumulative loss of up to VND17,730 billion, the total accounts payable of VND1,334,903 billion.

Commenting about the figures, Dr. Le Dang Doanh, a well-known Vietnamese economist said that the “mountain” of debts is burdening the national economy which cannot be settled in 2013.

In an interview given to Doanh nhan Saigon, Doanh said 1,300 trillion dong worth of debt is an extremely huge figure, which represents a sharp increase of 10.3 percent from 1,200 trillion dong in 2011. This shows the upward tendency in the SOEs’ debts.

Doanh has pointed out a strange thing that the enterprises still paid VND294 trillion to the state budget, a relatively high figure if compared with the modest total revenue of 1,600 trillion dong.

The pay to the state budget includes the money from crude oil sale, from the luxury tax imposed on tobacco and beer that the tobacco and brewery companies collected from consumers and paid to the state budget.

The mountain of debts is really a huge burden on the national economy. However, it is quite a strange that at the meeting with the Prime Minister some weeks ago, the heads of the nine economic groups and tens of general corporations seemed to be coolly about the big loss.

No one came forward and took responsibility for the bad business performance, and no one said about how they would treat the debts. Especially, the enterprises keep complaining about their difficulties and claiming for support.

Regarding the assessment by the Steering Committee for Enterprise Renovation and Development that the debt is still within the safety line, Doanh affirmed that the problem is more serious than thought.

“I don’t know how the “safety line” is; who has set up the safety line and what factors he considered when setting the line. However, if considering the ratio of debts on stockholder equity, one can easily find out that the debts of some economic groups have become no longer “safe”,” Doanh said.

“Do you think one dong of capital can pay for 1,000 dong of debts? It’s foreseeable with such a big debt, enterprises would not be able to pay,” he added.

Unlike ministries’ officials, Doanh has emphasized that the SOEs’ debt situation has become very serious and the problem needs to be solved urgently.

There’s a serious problem that despite the modest capital, SOEs still borrow as much capital as possible to expand business. Under the current regulations, the maximum loans banks can provide to the enterprises must not be higher than three times of the enterprises’ stockholder equities. However, in fact, the ratios could be 7 or 10 times.

Even the current regulation that enterprises can borrow the sums of money which are three times higher than their stockholder equities at maximum has been described as “unreasonable”.

US$1=VND21,000

DNSG