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Vinashin CEO blames groups troubles on world slump
Le Loc, head of the Vietnam Shipbuilding Group (Vinashin) confirmed reports of financial difficulties. Loc said the global recession has impacted the state-owned company just like its competitors and, he stressed, “we will pay what we owe”.
Le Loc was interviewed by Tuoi tre newspaper a few days after reports surfaced that subsidiary firms were having trouble making timely payments, getting goods through customs (because of tax arrears), and falling behind on deliveries. The Vinashin CEO confirmed that the group has had to refuse some orders and delay implementation of some projects due to difficulties in capital availability.
It’s not just us, Loc stressed; the global economic crisis has affected the industry worldwide, not Vinashin alone.
China, for example, has hundreds of shipyards suffering from the crisis; orders are down by 30-40 percent. A lot of companies that placed orders now do not have money to pay for the new ships.
A Hyundai (Korea) joint venture has delivered a 54,000 tonne ship to the owner, but the owner has left the ship idle. Businesses with many years of experience and powerful financial capability have been suffering just like Vietnam’s fledgling shipbuilding industry.
“We believe that the difficulties are just temporary,” Loc said.
Tuoi tre: Reports suggest that Vinashin is lacking capital. However, the Government has lent $750 million to Vinashin, money it raised by issuing a bond on the international market. Isn’t this huge sum of money enough to fulfill projects?
Le Loc: Developing a heavy industry like shipbuilding requires many billions of dollars in investment. The same is true for oil refineries, fertiliser or power plants. $750 million is really a small sum for so many ship yards the length of our coast. For Vietnam, developing the shipbuilding industry is really a good strategy.
TT: Some people say Vinashin is short of capital because it has invested in non-shipbuilding sectors like resort or exhibition centres. . . .
Le Loc: I can say for sure that the $750 million raised by the bond issue has been used for shipbuilding projects. Thanks to the investment, Nam Trieu Shipbuilding Industry Corporation has successfully tuned idle land into yards. It is building the biggest ships in Vietnam.
The Ha Long shipbuilding company, which previously could only build one or two thousand tonne ships, now can build 50,000 tonne ships. It is going to build ships for carrying cars, a very difficult job, to deliver to European partners.
It is true that we are planning to make investment in some resorts on Cat Ba island (Hai Phong), but we have not yet spent any money on the project. VInashin has delayed some projects to focus resources on the forty most important projects.
TT: Some experts say though big money has been invested in shipbuilding, the industry still remains just an assembly industry . . . .
Le Loc: We are striving to become much more than an assembly industry. The ships we are building now are the ones the world wants. Vietnam would not be ranked seventh in the world if it just built so-so ships. Maybe we are still inferior to South Korea and Japan in shipbuilding technology, but I dare anyone to say that Vietnam’s shipbuilding technology is backward. I am ready to argue with anyone on the issue.
TT: How do you explain the debts, including tax arrears, then?
Le Loc: I really do not know the details here. Maybe it is because of cash flow difficulties, or perhaps it is because of procedures. Of course, we will have to consider the problem and settle debts, but people should not think that we will ‘die’ just because of the debts.
TT: You called Vinashin’s difficulties are “just temporary.” How long do you mean by ‘temporary’?
Le Loc: It is really difficult to answer the question. The situation has improved. Worldwide, shipping tariffs have moved up slightly. Ship fleets have gained new work as the world has resumed exports. We hope the situation will be better in 2010.
Regarding the $750 million, we will pay our debt, but we still need to consider how and when we will pay. The Government keeps close track, it knows our financial strength.
vietnamnet, tt
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