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State forest enterprises face money problems
Financial difficulty was the biggest headache hitting State forest enterprises during the process that converted them into single-member limited liability companies, experts agreed at a forum held yesterday in Ha Noi.
The forum was co-organised by the Viet Nam Forestry Administration and Forest Sector Support Partnership (FSSP) to discuss challenges as well as opportunities of State forest enterprises in their integration into the world economy.
The reform process turned these enterprises into independent companies of the Government, which are responsible for running their own business and also the turnover.
According to Deputy Director of Yen Binh Forest Enterprise in northern mountainous Yen Bai Province Pham Dang Han, investment comes mainly on loans from banks.
Meanwhile, the loans were often offered with high interest rates and in the short term, while plantation was a long-term investment that forced enterprises to exploit immature forest to pay their debts, workers' salary and social insurance, Han said.
Exploitation of immature forests reduced the output and turnover could not make up for expenses. "Losses were inevitable," he emphasised.
Making the matter worse, the company had no capital to regenerate forests, leaving land uncultivated again. "It would not only be a waste but also badly affect the environment," he added.
In addition, it was also difficult for State forest enterprises to access loans from banks because they had no land use licences on hand as a mortgage, said director of Tien Phong Forest Company in central Thua Thien – Hue Province Bach Le Quang. Without a land use licence, they also faced disputes and encroachments from local residents but lacked measures to solve the problems, Quang said. The forest area under dispute was reported to nearly double, compared to what it was before the reform.
According to Deputy Minister of Agriculture and Rural Development Hua Duc Nhi, the enterprises are under a difficult and disoriented condition.
He added that they seemed to fail to fulfil their economic, environmental and social responsibilities.
Juergen Hess from FSSP said at the workshop that these enterprises were seen to undergo a significant downsize since the reform process started in 1993.
He pointed out that the number of State forest enterprises was reduced from more than 400 to 170, with the forest area under management halved.
The reform managed to achieve the "old wine, new bottle" adage, failing to improve the efficiency of production and business, which was the weakest and slowest among State-owned enterprises, said Deputy Director of the Party Central Committee's Economics Department Nguyen Van Tien.
"State forest enterprises have not yet been able to adapt to market mechanisms," he said.
It was time to take drastic reform steps towards helping these companies – the sector drivers, overcome the difficulties, emphasised Juergen.
According to Le Van Bach from the Administration of Forestry, long-term and stable land use licences should be granted to forest companies to help them better manage forests while avoiding disputes and encroachments from local residents.
Bach also proposed an exemption of land use fees during the period of 2011-15. Policies to create incentives for State forestry enterprises, allowing them to borrow money from banks, was also urged in an effort to help them overcome financial difficulty and generate income through forest exploitation.
The allocation of forest land to workers and local residents would help improve the situation, Bach agreed.
The reform was regulated on Resolution No.28 and also Decree No 200 which were issued in 2003 and 2004, respectively.
State forest enterprises have been developed over the past 50 years in Viet Nam, mostly in remote and mountainous areas, and currently manage more than 2 million ha of forest land.
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