Vietnam National Shipping Lines has scaled
down a plan to expand its fleet, cutting the cost estimate by one-third to 68
trillion dong (US$3.26 billion) amid criticism that the state shipper is
operating ineffectively.
According
to the company, often known as Vinalines, it originally planned to invest 100
trillion dong to buy more vessels. But due to negative prospects for the
shipping market, it has decided to revise the plan.
The
state-owned company also said it will not seek funding from the government
budget and finance its purchases with bank loans. The target is to increase the
total load capacity of its fleet to 5.6 million by 2020.
Vinalines
said its 154-ship fleet with a total load capacity of 3.4 million tons
accounted for 45 percent of Vietnam’s shipping capacity at the end of last
year. The original plan targeted a capacity of 15 million tons by 2015.
The
company mostly leases its ships, with Vietnam Ocean Shipping Company being the
only subsidiary that handles all shipping services with its own fleet. Analysts
said the leasing business is not a stable source of revenue for the company,
while also exposes it to liabilities if the leaseholders are caught up in
disputes or lawsuits.
Experts
also criticized the company for buying many old vessels whose values have
dropped sharply.
A
Vinalines official who requested annonymity admitted that due to limited
financial resources, its subsidiaries had to buy old vessels, breaking a rule
that bans local companies from buying ships already in use for more than 15
years.
“When
the transport sector was still doing well, prices of old ships increased every
month… But during a market downturn, those ships became a burden because their
prices dropped and it’s not easy to sell them,” he said.
Chu
Quang Thu, former director of the Vietnam Maritime Administration, said
Vinalines needs to be restrutured and make public its financial results first
before starting to buy more ships.
It is
not practical to invest a large amount of money for expansion unless the
company is competitive enough, he said.
Vietnam’s
shipping market is now dominated by foreign shipping lines. Even though
Vinalines reported profits over the past few years, economists have expressed
their doubts, calling for a thorough audit of the company to make sure it has
not been hiding losses.
Thanh
Nien
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