The Ministry of Transport has required the Viet Nam National Shipping Corporation (Vinalines) to restructure its business after the company incurred a huge loss of VND613 billion (US$29.1 million) during the first half of this year.
Vinalines needed to withdraw capital from associate companies in which it owns less than 30 per cent of charter capital in order to muster up all capital for its core business, Minister Dinh La Thang said in a meeting with the company in mid October.
With capital contributions worth VND3.46 trillion ($164.8 million) to 53 affiliates and associate companies, Vinalines now ranks first among State-owned enterprises in terms of the amount of capital invested outside the parent company.
In addition to its ship-building, port infrastructure and ship repair work, Vinalines has also pumped VND370 billion ($17.6 million) into non-core sectors such as securities, banking and real estate.
Vinalines now holds shares in Capital Securities Company, Vinalines Land Joint Stock Company, Vinalines Land Vinh Phuc Joint Stock Company and Maritime Bank. Last year, it received a total dividend of only VND240 billion ($11.4 million), equivalent to 8 per cent each year.
"It is such a low dividend level that Vinalines is forced to review the effectiveness of its investment," the company's general director Nguyen Canh Viet told Dau Tu (Viet Nam Investment Review) newspaper.
Vinalines has also encountered financial difficulties in its core business of marine transport and port infrastructure, according to trade experts.
Despite global freight charge fluctuations, Vinalines still went ahead with massive investments in purchasing and building new vessels. These purchases put the company under strong financial pressure, experts said.
Meanwhile, the highly anticipated joint ventures between Vinalines, Sai Gon Port and foreign partners, including the newly-operational SP-PSA International Port Co., Ltd and Cai Mep International Port Co., Ltd (CMIT), were also reported to have suffered a loss of VND460 billion ($21.9 million).
Vinalines should review its existing and future projects and then decide which projects should receive the top priority, said Thang, suggesting that the company should focus on developing Lach Huyen Port in the north and Van Phong Port in the central region while upgrading existing ports in the south.
The company also needed to concentrate on developing logistics services, which could be a breakthrough for its development rather than purchasing old ships, Thang said.
Vinalines has been given a deadline of the end of November to submitt its overall restructuring scheme to the ministry.