More than 230 Taiwanese and South Korean projects were dissolved or faced bankruptcy in the last few years, with some foreign-invested enterprises (FIE) using investment certificates to take out bank loans then absconded to their home countries, according to Saigon Tiep Thi newspaper.
Banks currently could not take back loans from 22 projects in 12 different locations, mainly in Hai Duong and Phu Tho provinces.
For instance, in 2005 Hai Duong Province People’s Committee gave the nod for Taiwan-based Kenmark Group to pump $500 million into Hai Duong city’s Viet Hoa Industrial Park.
Since the foreign-invested project envisaged building industrial production, trading and services facilities and urban areas that match provincial industrial development planning, the developer could easily take loans worth several dozen million US dollars from local banks such as the Saigon-Hanoi Bank’s Quang Ninh branch, Bank for Investment and Development of Vietnam’s Thanh Do branch and Habubank’s Bac Ninh province branch.
Kenmark’s two factories abruptly stopped operating in May 2010 and the developer left the country due to disputes during the project’s implementation. The firm owed around $50 million to local financial institutions which were turned into bad debts. Relevant banks reportedly seized Kenmark’s assets in an effort to partly recoup their losses.
In Phu Tho province, head of provincial Industrial Zone Authority Nguyen Manh Hung acknowledged many FIEs had left local credit institutions counting their losses.
Some South Korean firms took over $12 million loan packages from Agribank’s Phu Tho to get projects rolling. These firms later incurred losses and faced insolvency as their owners absconded, according to branch director Vu Van Minh.
Minh said the provincial authorities took back investment licences from such firms and Agribank Phu Tho procured around $60,000 from selling workshops and machinery of these firms.
Reality shows that slew of FIEs used their projects’ land use rights and relevant assets as collateral to take out bank loans.
Some bank executives acknowledged the land use rights and asset values claimed by FIE owners were often higher than the actual values.
To address the situation on September 19, 2011 the prime minister issued Directive 1617/CT-TTg forwarding to ministry leaders and provincial people’s committees which regulates foreign investment projects’ licencing and post-licencing management. VIR