VietNamNet Bridge – State owned conglomerates have cited a lot of reasons to delay the process of withdrawing capital from the projects in other business fields-- which bring fat profits to them.

Tran Ngoc Thuan, General Director of the Vietnam Rubber Group (VRG), said the group had withdrawn VND200 billion worth of capital it contributed into some non-rubber projects by the end of 2013.

However, the head of the rubber group said it would be a “big waste” if VRG has to withdraw all the invested capital prior to 2015 as requested by the State.

According to Thuan, a lot of the investment projects have been prosperous, bringing fat profit to the group. Therefore, the group would lose the big sources of income if it quits the projects right now.

The profitable projects of VRG include the four hydropower plants.

President of the Bank for Investment and Development (BIDV) Tran Bac Ha also said the bank has been making big money from the investment projects in two non-core business fields. The hydropower plant in Laos brings the high profitability rate of 10.8 percent, while the aircraft leasing company 18 percent.

Ha said it would be better to allow state owned conglomerates to be selective in withdrawing capital from non-core business fields, while they should not be forced to give up all the investment projects.

Nguyen Manh Hung, Deputy General Director of the military telecom group Viettel, has proposed the government to allow state owned enterprises (SOEs) to use a part of their capital to make investments in non-core business fields, because SOEs, like other businesses, always need to seek new business opportunities.

The government has told SOEs to withdraw capital from all their investment projects in non-core business fields to gather their strength on the main business fields.

The decision was released after economists warned about the tendency of SOEs injecting money in the non-core business fields as finance, banking and securities. A lot of the projects have made the SOEs incur big losses due to their lack of experiences in the fields and the gloomy stock market.

However, Hung said that it would be better to not go to extremes by forcing SOEs to give up all the investment projects in other business fields.

“Some business fields will disappear once they become no longer necessary. If so, the enterprises in the fields will have to seek new opportunities in other business fields, or they will have to stop operation,” Hung said.

“There are many good investment opportunities in other business sectors. If SOEs are only allowed to invest in their major business fields, they will lose opportunities,” he added.

The heads of other state owned conglomerates did not comment about the necessity of the investments in non-core business fields, but have been slow in withdrawing capital.

Thuan from the rubber group, said that the group needs to finish the initial investment of the projects before it can withdraw the capital.

Meanwhile, President of Vietnam Airlines Corporation Pham Viet Thanh warned that the corporation may fail to withdraw capital as scheduled due to the provisions in some legal documents. As such, the capital withdrawal process would heavily depend on the amendment of the documents.

Kim Chi