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SOEs awash in debts

Nov 25, 2012. The outlook for the State corporate sector is never so dreadful after a report sent by the Ministry of Finance to National Assembly deputies in Hanoi this week unveils the black hole of crippling debts that will likely push many State-owned groups to the verge of bankruptcy. The path to survival looks rocky, and is only to open up in case macro-economic stability is achieved in the coming time.

As covered in local media, the total liabilities of 91 State groups and corporations amounted to nearly VND1,300 trillion last year, or around US$63 billion, a staggering increase of nearly 19% from the previous year. Such an amount of debts, says Sai Gon Tiep Thi, was equivalent to 65% of the national gross domestic product (GDP) in 2011.

Topping the list of debtors is PetroVietnam with nearly VND287 trillion, followed by Vietnam Electricity Group with over VND257 trillion, reports Tuoi Tre.

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Japanese firms witness low localization ratio in Vietnam: 28.7%

HCMC, May 14, 2012. Japanese enterprises in Vietnam have witnessed a low localization ratio in material and industrial components compared to other Asian nations.

Speaking at a contract signing ceremony for organizing 2012 Metalex Vietnam and Nepcon Vietnam expos last week, Yoshida Sakae, managing director of the Japan External Trade Organization (JETRO) in HCMC, said the localization ratio was 28.7% in Vietnam last year. Meanwhile, Japanese firms in China, Thailand, India and Indonesia have localization ratios of 59.7%, 53%, 41% and 39.3% respectively.

A low localization ratio means investors have to import a lot of overseas materials and components. As a result, production costs in Vietnam are higher than other countries in the region and Vietnamese products will in turn be less competitive on global markets,” Yoshida said.

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Vietnam private sector squeezed by rising costs

An annual report that ranks Vietnam’s 500 largest companies based on revenues, profit, growth rate, assets, and number of employees shows that returns are declining for private companies. One of the most respected economists in the country, Pham Chi Lan, weighs in on the issue.

Q. The number of private companies in the list of 500 largest enterprises in Vietnam, the VNR500, has risen from 118 in 2007 to 188 now. But their efficiency is falling. The average return-on-assets ratio of the private sector dropped to 2.4 percent in 2011 from 3.1 percent in 2007, while the return-on-equity ratio fell from 34.9 percent to 16 percent. What do you think about this trend?

Pham Chi Lan: Around 2009 and 2010, some research institutions like the Central Institute for Economic Management also issued reports on industries and business sectors in Vietnam. These reports all showed that the return ratios in different sectors were falling in recent years. I think it’s not unusual to see the private sector posting smaller returns, considering the recent economic conditions.

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Vietnam sees 20% less foreign investment in 2011

For the first 11 months of 2011, foreign direct investments are down by 20 per cent over the same period last year.

There is so far only US$ 12.7 billion in foreign direct investments, equivalent to 83.8 per cent as against the same period last year.

HSBC Vietnam head of Global Markets Pham Hong Hai said: “In terms of the investments into the country, it has changed.

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