Vietnam - A great many ways farmers chase debtors

VietNamNet Bridge – With farmers being the creditors, who are the poor and do not want to spend money and time on lawsuits, they have been applying their special methods to collect debts.

Chasing debtors to fly from creditors

The people, who are the creditors of the Dai Tan ethanol plant in Quang Nam province, have been living in the tents installed in front of the plant for the last several months. They have been waiting here, hoping to meet the owners of the plant to ask to pay debts.

The people themselves are also the big debtors. Since they cannot get paid from the plant, they don’t have money to pay to farmers for materials. Since farmers contact them to ask to pay debts every day, they have to leave their homes and “settle down” there after asking for the permission to reside temporarily from the local authorities.

Since the owners of the plant refused to meet them, the creditors have to lie as protests in front of the plant for several months. However, their method seems to come to nothing.

One of the people here said the Dai Tan plant owes VND2 billion to him, and he now dares not return to the home village, because he does not have money to pay for the cassava collected from farmers.

Going to quod for interfering in debtor’s business

Two fish sellers in Can Tho City have been sentenced to jail because they demolished the assets and took away the machines and equipment of an enterprise which could not pay billions of dong to them.

In 2009, Pham Thi Mai and Nguyen Van Lien farmed fish to sell Van Hung private enterprise. The fish sale deal was valued at VND5 billion dong, while Van Hung still owed VND1.6 billion to the two farmers.

In January 2011, Mai said she wanted to buy Van Hung enterprise at VND5 billion dong, and the proposal was accepted by the two managers of Van Hung. Mai suggested the enterprise purchase as a payment of the debt, after she failed to ask the enterprise to pay for the fish.

The seller and buyer agreed to meet each other in February 2011 to follow necessary administrative procedures to wrap up the deal. However, Van Hung then changed its mind. Therefore, Mai got angry, broke the office glass and left.

After that, Mai sent workers to Van Hung many times to take away machines, equipment and many other assets of the enterprise which she has sold for billions of dong.

Later, Vo Thanh Tung, another creditor of Van Hung also came to ask for payment. He also applied the same method to force Van Hung to pay debt.

Farmers threaten to drink poison if company doesn’t pay debts

In August 2012, a lot of farmers encircled the house of the director of Bianfishco to ask the businesswoman to pay for their fish. The case was so serious that the Can Tho City People’s Committee had to report to the Prime Minister about the case.

Tens of fish farmers gathered in front of the house of Pham Thi Dieu Hien, Director of Bianfishco for half a month to demand debt payment. Sometimes they sent words through the loudspeakers to Tran Van Tri, the husband of Dieu Hien that they would not leave unless Tri and Hien pay debts.

The wife of Tran Van Hon, 57, one of the creditors, joined the group of farmers with a bottle of pesticide. She said that if she cannot get money, she and her husband would commit suicide because they have been reduced to destitution.

Hanh Giang

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Vietnam - Thousands of tax debtors decamp

VietNamNet Bridge – Thousands of enterprises have been added into the taxation bodies’ black list because they have escaped with unpaid tax.

The Hoan Cau Company Ltd headquartered in district 11 of HCM City, a spongy bag producer has not paid the VAT of 22.799 billion dong.

Within just three months, from July 21 to October 17, 2008, the company made 87 customs declarations about the primary resin imports at five sub-departments of the HCM City Customs Agency, and three customs declarations at the Binh Duong provincial Customs Agency.

The imports were plastic resins which bear the import tariff of zero percent and the VAT of 10 percent. As such, the total tax sum the company had to pay was 22.799 billion dong.

Under the current laws, primary resin importers can pay tax within 90 days since the day they get the imports cleared. Exploiting the policy, La Hue Kiet, US nationality, Director of the company, and other foreign capital contributors have escaped Vietnam, repudiating the 23 billion dong worth of unpaid VAT.

As for other import products, including cars and motorbikes, importers cannot enjoy the grace period and they have to pay tax immediately on the customs clearance.

In an effort to collect the debts, the HCM City Customs Agency has sent a dispatch to the police, requesting the assistance to find out the debtor. In reply, the police promised to cooperate with customs agencies in collecting debts, then prosecuted Kiet for his “abusing of power to misappropriate assets.”

However, Kiet ran away during the grace period already, while the police have not arrested him though a wanted notice has been released.

Hoan Cau is just one of the over 1000 businesses which have unpaid tax or escaped from tax duties which have been marked in the customs agencies’ records as “irrecoverable debts.”

A report by the HCM City Customs Agency showed that by October 31, 2012, it had found 1118 businesses run away, leaving a huge sum of unpaid debt worth 421.5 billion dong.

The Saigon Port Customs Sub-department No. 3 alone has reported that 117 businesses have run away from their registered addresses with 66 billion dong unpaid debts.

An official of the sub-department said that many of the enterprises fled right in the grace period. Thien Thanh Phat Housing Construction and Development, for example, has not paid the tax sum of 5.4 billion dong which it should have paid in 2004 for the car imports. Him Lan Trade and Production Company is owing 4.5 billion dong.

In principle, coercive measures can be applied to force enterprises to pay tax. However, an official of the customs agency said the measures would be effective only if the enterprises are still in operation. Meanwhile, customs officials can do nothing with the enterprises which have escaped from the registered addresses.

In these cases, customs agencies would transfer the records of the violators to the investigation agencies. However, the measure still has not been exploited well, because of the lack of the cooperation among state management agencies, which has been explained by the lack of the legal documents stipulating clearly the responsibilities of the involved parties.

Customs agencies are the subjects covered by the Tax Management Law. However, under the current criminal laws, customs agencies have no authorities to prosecute criminal charges for “tax evasion.”

The HCM City Customs Agency has asked to give it more power in order to fight against the tax evaders.

Hai Quan

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Vietnam - Who are the biggest debtors?

VietNamNet Bridge - The names of the biggest debtors have not been revealed. However, an official of the National Finance Supervision Council has affirmed that most of the bad debts are being incurred by two subjects – state owned enterprises and private “big guys.”

In a report released recently by the State Bank’s Inspection Agency, the bad debt (irrecoverable debt) ratio may reach 8.6 percent, or about 200 trillion dong.

According to Thoi bao Kinh te Vietnam, by March 31, 2012, state owned banks’ bad debt ratio had reached 50.5 percent. Meanwhile, the ratios were 27.8 percent for joint stock banks, 4.2 percent for foreign banks and 17.5 percent for other credit institutions.

However, the names of the biggest debtors, which have created the “blood clots” causing the “traffic jam” in the national economy remain unknowns. On the TV program “People ask – Ministers answer” broadcasted in early July, Minister of Planning and Investment Bui Quang Vinh cited the figures from the Ministry of Finance as saying that state owned enterprises had incurred the debt of 1,008,000 billion dong, while their stockholder equity is 790,000 dong.

On average, the ratio of debt on stockholder equity of state owned enterprises is 1.36. However, of the state owned enterprises, 30 enterprises have the debts three times higher than the stockholder equity.

The Truong Son Construction Corporation, for example, has the debt higher by 9.19 times than the stockholder equity. The figures were 4.79 for Licogi, a construction and infrastructure development corporation, 4 for HUD, 3.83 for the Electricity of Vietnam EVN and 3.12 for Vinalines, a shipping firm.

The figures account for nearly 50 percent of the total outstanding loans provided by the whole banking system (2.5 million of billions of dong).

There has been no official report about the actual debts incurred by state owned enterprises. Dang Van Thanh, Deputy Chair of the Vietnam Accountants’ Association, also said that the debts incurred by state owned enterprises are very complicated and it’s very difficult to reckon up the debts.

However, the bad debts are believed to increase in 2012, when enterprises face bigger difficulties which make them exhausted.

Analysts have warned that a lot of debts, in debt classification, would be transferred into other groups of debts with higher risks. Meanwhile, according to Cao Sy Kiem, former Governor of the State Bank, up to 70 percent of the banks’ bad debts are being incurred by state owned enterprises, while the debt incurred by private businessmen just amounts to a small proportion.

The second biggest debtor, according to the official of the National Finance Supervision Council, is the well-known big guys, including the ones whose names appeared in the list of the top stock millionaires.

“The big guys mostly borrowed money to develop real estate projects, The loans could be hundreds of billions of dong or tens of trillions of dong. However, since the real estate market has got frozen, the capital has also been buried under the buildings, and the big guys cannot take back the investment capital to pay bank debts,” the official said.

“I know a big guy, who borrowed the huge sum of 4 trillion dong to develop a high rise building in HCM City. However, since there has been no leasers, he does not have money to pay debts,” he added.

Meanwhile, Kiem has attributed the big bad debt ratio of state owned enterprises to the banks’ carelessness in inspecting the feasibility of the enterprises’ projects. Commercial banks all believe that state owned enterprises are backed by the state and they would be able to pay debts. Therefore, the banks skipped a lot of necessary examination steps, lending to the enterprises with easy conditions.

Kim Chi

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