Feb 2, 2013

Vietnam - PM commanding CGs to revise business goals

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Vietnam's leaders are calling on all state-owned groups and corporations to increase their production and business goals to meet the government' economic growth targets.

At a recent meeting with state-owned enterprises (SOEs) in Hanoi, Prime Minister Nguyen Tan Dung ordered all corporations and groups (CGs) to make greatest efforts to revise their production and investment plans to achieve an overall growth rate of all CGs of 10 per cent for 2013 over 2012.

"Each group and corporation must ensure operational effectiveness in 2013," he said.

His order sharply contrasts with early forecasts of some prominent SOEs that are forecast decreasing revenues and profits in stubbornly sluggish economy. "This means that our economic target [5.5 per cent growth] will fail. So you must revise your targets," Dung told CGs.

The Ministry of Planning and Investment (MPI) has reported that this year, 73 wholly state-owned CGs were expecting an average 4 per cent reduction in revenues, and their pre-tax profit and contributions to the state coffers would each slash 21 per cent, against last year.

For example, PetroVietnam estimated its revenue, profit and contribution to the state budget will slide 25, 39 and 23 per cent, respectively, against 2012.

Le Minh Chuan, general director of Vietnam National Coal and Mineral Industries Corporation (Vinacomin) said Vinacomin expected a decrease of 15 and 20 per cent in revenue and profit, respectively, for this year.

"Vinacomin faced too many difficulties in 2012, including a 10 per cent reduction in revenue, and 15-20 per cent reductions in coal consumption and coal prices in the market," Chuan said.

"Vinacomin's output markets are expected to continue with difficulties," he said. " The corporation's customers have asked us to continue paring down prices of coal for this year. Additionally, Vinacomnin is also finding it difficult in mobilising capital."

Meanwhile, Vietnam Post and Telecommunications Group and Vietnam Rubber Group also forecast declines in revenue and profit, leading to their decreased contributions to the state budget, at 3 and 10 per cent respectively, against last year.

"Thus, the visible declines in revenue, profit and contributions to the state coffers of CGs in 2013 will have a negative impact on the economy as a whole," the report said.

Dung said CGs' expected low fruits would cause a budget deficit this year and harm the country's economic growth.

Last year, total pre-tax profit of Vietnam's nine state-run economic groups and 94 state-owned corporations, which have yet to be reshuffled, reached at $6.13 billion, down 5 per cent from the previous year. Their total contribution to the state budget was $14.1 billion, down 12 per cent on-year.

But Dung argued: "Your losses can be due to objective reasons, but you [CGs] must seriously reform your administration soon. Are your losses due to your weak capacity or your breaking of the law?"

At present, CGs are creating nearly 30 per cent of Vietnam's gross domestic product and 39 per cent of the country's total industrial production value. They are also employing 1.2 million local workers with an average monthly income of $168.2-$240.3.

Khoi Nguyen | vir.com.vn 

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