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Government enterprises find savings to help inflation battle
Vietnam’s large state-owned companies have slashed investment in non-priority and ineffective projects, contributing to efforts to meet the country’s inflation reduction and economic development targets.
Fifteen groups and corporations have cut VND29.366 trillion (US$1.75 billion) in costs from 1,003 projects scheduled for this year, decreasing the cost of their initial plans by 12 percent, director of the Department of Local Economies under the Vietnamese Ministry of Planning and Investment, Le Van Hoc, said at a press briefing in Hanoi Wednesday.
The cost cutting is part of the government’s inflation-fighting economic blueprint, unveiled in late March, which included a directive for government agencies to reduce their spending by 10 percent.
Surging world oil prices have inflamed Vietnam’s inflation rate, which hit 26.8 percent in June.
Economic groups, including the Vietnam Posts and Telecommunications Group (VNPT), the Vietnam National Textile and Garment Group and the Vietnam National Coal-Mineral Industries Group have slashed investment of VND18.9 trillion ($1.1 billion) in 761 projects, accounting for 7.77 percent of total planned investment, Hoc said at the press briefing.
Groups and corporations reporting big reductions of state investment included the National Oil and Gas Group (PetroVietnam) which cut VND6.65 trillion ($395.8 million), the Vietnam National Shipping Lines (Vinalines) which made savings of VND6.21 trillion ($369.9 million) and VNPT which trimmed investment by VND 1.87 trillion ($111.3 million).
The groups and corporations have also planned to delay the start of 185 projects worth VND3.7 trillion ($222 million) and postpone the implementation of 528 others valued at VND11.6 trillion ($691.7 million).
The 15 groups and corporations had planned to invest VND243.8 trillion ($14.5 billion) in development projects this year, equivalent to 24.2 percent of their total assets and 89.4 percent of their chartered capital.
The investments of the groups and corporations financed by loans accounted for 52.9 percent of total investment and 14 percent of assets this year.
The groups and corporations’ investment in property, stocks and finance and banking sectors accounted for only 5 percent of their total investment and 1.26 percent of their assets this year.
To fulfill the targets of curbing inflation, developing the economy and ensuring investment effectiveness, the government has asked economic groups and corporations to continue to review, cut and delay unnecessary and ineffective projects in the remaining months of this year.
The groups should also increase their investment in major and important projects and those deemed to have high effectiveness, Hoc said.
The government has required commercial banks to ensure loans for operational electricity projects and preferential credit for operational power resource projects, as well as assist groups to discuss their loan requirements with foreign banks.
It has directed commercial banks to help firms which produce export items or those with large numbers of employees boost exports to help reduce the ballooning trade deficit.
The government has also asked groups to delay their plans on investing in unnecessary fixed assets, or those with low feasibility, on establishing new member companies and on contributing capital to other firms, especially financial ones and banks.
It has asked the groups to accelerate their equitization process to increase capital resources for necessary investment fields.
Ministries, central agencies and localities have also slashed state-funded investment in ineffective projects in a bid to reach the state’s economic development goals.
Nationally, municipal authorities have cut investment of VND5.7 trillion ($336.9 million) in 1,884 projects, amounting for 9.1 percent of their total investment planned for this year, according to the Ministry of Planning and Investment.
Thanhnien
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