A drilling platform of the Viet Nam Oil and Gas Group (PetroVietnam). State economic groups and corporations have a total debt of over $64 billion. — Photo cafebiz.vn

HA NOI (Biz Hub) ― 127 economic groups and corporations in the State-run sector had total debt of about VND1,350 trillion (US$64.3 billion) at the end of the 2012 fiscal year, VnEconomy reported, citing a a recent Government report submitted to the National Assembly.

The figure, which represents more than half of all financing for State-owned enterprises (SOEs), indicates a 6 per cent jump over the previous year.

The firms had nearly VND316 trillion ($15.05 billion) in total foreign debt and borrowed about VND403 trillion ($19.2 billion) from credit institutions, a year-on-year increase of 2 per cent.

Viet Nam Oil and Gas Group was responsible for a bank loan of about VND125 trillion ($5.95 billion) and Electricity of Viet Nam for VND103 trillion ($4.9 billion).

Total equity of the groups and corporations reached VND921.6 trillion ($43.89 billion), up 27 per cent year-on-year, with additional capital coming mainly from their profits.

Minister of Finance Dinh Tien Dung said the companies could generally maintain equity, but several firms saw capital decline due to business losses and financial management failures.

Equity slumped VND2.2 trillion ($104.76 million) at Viet Nam National Shipping Lines (Vinalines), VND205 billion ($9.76 million) at Military Petroleum Corp and VND316 billion ($15.05 million) at Construction Machinery Corp.

Forty-one companies suffered total business losses of nearly VND29 trillion ($1.38 billion), according to the Government report. Losses totaled VND4.56 trillion ($217.14 million) at Vinalines, VND246 billion ($11.71 million) at Viet Nam Multimedia Corp (VTC) and VND44 billion ($2.1 million) at Civil Engineering Construction Corp 8.

While the Government urged SOEs to withdraw capital from non-core lines of business, financial investments by State groups and corporations still increased.

Last year, their short-term investments expanded 28 per cent to VND153.58 trillion ($7.3 billion), while long-term investments rose by 5 per cent to VND171.37 trillion ($8.16 billion).

Their investments grew 3 per cent to VND13.15 trillion ($626.19 million) in banking and soared 20 per cent to about VND6.1 trillion ($290.48 million) in property.

While their total assets reached over VND2,390 trillion ($113.8 billion), up 28 per cent year-on-year, the report said SOE performance efficiency still lagged behind the size of the sector. Many firms showed low labour productivity and weak management capacity, it noted.

"Monopoly still exists in some areas, causing sluggish progress for SOEs," the Ministry of Finance said in a report.

Sai Gon Tiep Thi (Sai Gon Marketing) online commented that it was hard to be optimistic about the SOEs' debt payment abilities.

According to a national power development master plan, the electricity industry needs about $48.8 billion in investment capital by 2020. But Electricity of Viet Nam general director Pham Le Thanh said the company and its affiliates could self-manage only 20-30 per cent of the figure, meaning they would have to continue to depend on loans.

National Finance Supervisory Council chairman Vu Viet Ngoan told the website that the VND1,350-trillion debt was not worrying, as the ratio of financial leverage (the degree to which investors utilise borrowed money to acquire additional assets) was normal (1.74 on average). He said this ratio was significantly lower than that recorded five years ago, as "difficulties have eased and trends are better." ― VNS