After a successful period making revolutionary films, mainstream Vietnam cinema is now mostly comedies, which are fairly safe bets as they are easy to make and likely to pay for themselves, with the odd hit scoring big. 

Private film companies, where the profit motive rules, have become more cautious and hesitant to produce artistic films or those with questionable box office prospects, while history-based works are also struggling to survive both artistically and financially. 

Artists at the Vietnam Feature Film Studio (VFS), who earn less than the minimum wage and must support themselves with odd jobs, have drawn much attention from the public recently after asking how a transport group with no experience in film could possibly light up the big screen, following a recent problematic equitization that exposes many loopholes and shortcomings in the framework for enterprise valuations in Vietnam.

Conflict of interest

Though the government provides limited State finance for films and allows foreign funding of some productions, Vietnam’s film industry is plagued by problems and produces only a handful of films - four or five features - a year. 

The annual allocation for one of the country’s main studios is only $500,000 a year; nowhere near what the lowest budget films in Europe or the US receive. 

Film production equipment is antiquated, decent film stock expensive, and funds so limited that directors, even after receiving government approval of their scripts, must often wait three or four years before they can start shooting.

As films produced under these conditions are often technically and artistically flawed, some historical and revolutionary movies have become box office flops in recent years, especially in the face of contemporary productions by both domestic and foreign competitors. 

This, combined with the ready availability of cheap pirated CDs of the latest movies, has exacerbated the industry’s financial problems.

State-run film studios consider equitization as a way out, hoping to maintain their artistic values while living on the country’s communist revolution. 

Established by the government in 1953, VFS put a 65 per cent stake up for sale last year, which was snapped up by the Hanoi-based Waterway Transportation Corp. (Vivaso), the only investor interested, for more than VND32 billion ($1.4 million). 

In the aftermath of the sale, senior members of the studio said the company had failed to make good on promises to buy new equipment and begin promotional campaigns. 

Vivaso set a goal of producing one movie and one television series each year, which, according to artists, is far below the studio’s potential. At the same time, the company has also fallen short on funding promises. 

Artists were told they would receive an average wage of VND4.8 million ($211) a month, but many have received just VND1 million ($44) or nothing at all. They were told that they would only receive the full amount if they were in the office from 9 to 5. 

The company has also rearranged the workspace, crowding more artists into one place and using the spare space for other businesses, including a restaurant. 

Artists said they had been looking for an outsider to give the studio a fresh start for years, but many productions have incurred losses in the range of VND40 billion ($1.8 million) over the last 20 years. 

Decision makers cite complex steps in brand evaluation, bad investments, and financial losses for setting VFS’s brand value at zero.

Tricks of the trade

Renowned film veterans claim that previous masterpieces aren’t just movies; they helped tell of the country’s struggle for independence and longing for peace to the international community during wartime. 

They portrayed Vietnamese people during those hard years, from soldiers who laid down their lives on the frontline to mothers and wives who wept silently for their loved ones and children who held on to their dreams even when fighter jets and bombers were tearing up the sky above. 

It was a slap in the face for many when the brand value of the largest State-owned film studio in the country, with around 400 movies produced over the decades, including award-winning features, was considered not even worth one Vietnam dong. 

Deputy Director of the Ministry of Finance’s Corporate Finance Department, Mr. Dang Quyet Tien, told VET that the Steering Committee for VFS’s equitization was responsible for verifying its value, though he acknowledges it wasn’t an easy task. 

Former advisor to the Ministry of Planning and Investment, Dr. Le Dang Doanh, described the value of the once-prestigious film studio’s brand being put at zero as “unacceptable”.

The public has expressed concern that the investor’s interests might not lie in the resurrection of the studio but in the prime land spots the studio holds, which weren’t factored in during the valuation process. 

Its headquarters, covering 5,500 sq m by West Lake in Hanoi, with land use rights suspended since 2003, and nearly 1,208 sq m in Ho Chi Minh City’s District 1, are leased lands with rentals paid on an annual basis. 

Two other favorable locations in Hanoi, including one with an area of 904 sq m and another with 6,383 sq m, are allocated land but the studio was yet to finalize legal procedures at the time of the valuation. 

While allocated land is considered an intangible fixed asset during the valuation process of State-owned enterprises (SOEs) under Circular No. 45 from 2013 on the management, use, and depreciation of fixed assets, the same doesn’t apply to leased land with rentals paid on an annual basis. 

“This is tricky, because while leased land with an annual basic contract in theory is not considered a fixed asset, it still has some intangible value in reality because not everyone is entitled to lease land from the State,” former Deputy Minister of Natural Resources and Environment Mr. Dang Hung Vo told VET, adding that this loophole in the SOE valuation framework has been found lacking after changes in the land law, with it being excessively manipulated for corruption purposes. 

More than just equitization

Prime Minister Nguyen Xuan Phuc in late December last year called on the Ministry of Culture, Sports and Tourism to review the entire equitization process of the national film studio, but it wasn’t until recently, when Deputy Prime Minister Vu Duc Dam paid a site-visit to the studio, that numerous petitions by studio employees and the Vietnam Cinema Association were heard. 

The announcement of a two-month inspection of VFS’s equitization process came in October, with results to be reported to the government before December 1. 

Rumors regarding the transparency of the national studio’s equitization and the suspicious land valuation were strongly refuted, with Deputy Minister of Culture, Sports and Tourism Huynh Vinh Ai, who is also the Head of the Steering Committee for VFS’s equitization, insisting that the entire process adhered strictly to standards and regulations. 

“The investor cannot just do what it wants and use those land lots for commercial property developments,” he said. “The ministry will ask the city’s People’s Committee to reclaim the land, revoke construction permits, and seek a lawsuit if Vivaso doesn’t honor its commitments.”

While artists and the public reacted positively to the announcement, film experts believe that VFS’s future is dim, no matter what the outcome of the inspection may be. 

“Though I understand that equitization is necessary, we should note that the nature of the local film industry requires direction and stable resources from the government,” former President of the Vietnam Cinema Association, Mr. Tran Luan Kim, told VET, adding that more funds to make classic Vietnamese movies would enable them to compete with foreign films at international festivals.

Moving forward, perhaps it is now more crucial to redefine local cinema as a potentially lucrative and profitable industry and not just something seen as an art form. 

“There should be a revision of regulations to ensure that classic Vietnamese movies are able to survive in their own country,” Mr. Kim said. 

“A film foundation to support high-quality film projects, especially genre and experimental films, should be set up, with State-owned film studios formerly managed separately being under one management, so they can improve their competitive advantage.”  

VN Economic Times