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Investment plan for Vinalines needs second thought

HCMC – Given the loss-making business of the Vietnam National Shipping Lines (Vinalines), the Ministry of Transport’s plan to pour a hefty VND100 trillion into the State-run shipper arouses grave concern of experts.

The industrialization and modernization scheme proposed by the ministry consists of a two-phase investment in the shipping fleet of Vinalines.

Particularly, in the period from now to 2015, Vinalines will be funded VND30 trillion, or roughly US$2 billion, to build and purchase 67 new vessels. In the later five years, the shipping giant will receive VND70 trillion to equip an additional 95 ships.

Speaking to the Daily, Nguyen Huu Nguyen of the Southern Vietnam Economic Center (SVEC) wondered where such a huge capital would be sourced from.

A series of questions arise as to how long the payback period would be in case the investment capital was mobilized from the central budget, or if the capital was borrowed from external sources, then which lending rate would be imposed and whether the transport ministry use its own profits or the State capital to pay interest.

“A basic principle of business projects is that project owners must recover the cost of investment themselves rather than leaning on the State budget to cover losses like what Vinashin has done,” said Nguyen, referring to the heavily-indebted State-owned conglomerate Vinashin.

Nguyen Van Thu, former director of the Institute of Transport Planning and Management, cited the sea transport planning scheme approved by the Prime Minister in 2009, saying that the loading capacity of Vinalines’ fleet would amount to 8.5-9 million tons by 2015.

Meanwhile, the transport ministry in its scheme set a target to raise the total loading capacity of the shipping fleet to 15 millions tons in 2015, not matching the Government-approved master plan. In addition, the scheme only brings up the investment in Vinalines, while other units are not mentioned.

Thu said the vessels of Vinalines are already redundant, yet cannot satisfy the shipping demand. Therefore, the ministry should rethink the scheme to delay certain investment portfolios that are not really necessary at present.

Lawyer Tran Huu Huynh, deputy general secretary of the Vietnam Chamber of Commerce and Industry (VCCI), said local sea transporters are losing their market share to foreign firms and many of them are forced to sell ships to repay debts. Given this situation, investment in new vessels needs thorough consideration, he told the Daily.

To develop a large shipping fleet to compete with foreign-flagged vessels, the transport ministry should map out a specific strategy aligned to the actual landscape.

As of last year’s end, Vinalines had 154 vessels, with a combined loading capacity of 3.4 million tons, or 45% of the nation’s total. The shipping fleet is operating inefficiently, with many of them left unused or detained in other countries.

Most sea transporters reported losses in the first quarter. Vinaship Joint Stock Company, for example, declared a loss of VND43.4 billion, while the Vietnam Sea Transport and Chartering JSC (VITRANSCHART), a subsidiary of Vinalines, claimed a loss of VND21.1 billion, according Tuoi Tre.

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