Business

Overseas investment of State-owned enterprises fails to meet expectations

SGGP
In general, the outbound investment activities of State-owned and State-invested enterprises have not met the expectations. Besides objective reasons, such as politics and investment policies in the host country, the subjective causes are the issues of management capacity, risk management, market forecasting capacity, and experience in overseas investment.
According to the latest report sent by the Government to the National Assembly of Vietnam, by December 31 last year, 27 state-owned and state-invested enterprises had had 130 overseas investment projects, mainly in the field of telecommunications, oil and gas exploration and exploitation, rubber plantation, mineral exploitation, construction, air transport, hospital, and pharmaceutical manufacturing, with total registered investment capital of more than US$12.07 billion.

In which, some corporations with large registered investment capital included Vietnam Oil and Gas Group (PVN) which accounted for 56 percent of total investment capital, Viettel Group which accounted for 25 percent, Vietnam - VRG Rubber Industry Corporation (VRG) which accounted for 12 percent, and Vietnam National Chemical Group which accounted for 4.3 percent.

Last year, the total implemented overseas investment capital of enterprises was $289.96 million, concentrating on the projects of PVN with $72.08 million and Viettel with $188.44 million. These investments were to continue the implementation of projects from previous years following the plans. It means that there were no new offshore investment projects last year.

By December 31, 2019, the accumulated implemented outbound investment capital of State-owned and State-invested enterprises was more than $6.52 billion. PVN, Viettel, and VRG were the three corporations with the highest implemented outbound investment capital, with investment value at over $3.44 billion, nearly $1.8 billion, and $936.02 million, respectively.

Regarding the situation of capital recovery, overseas investment projects remitted a total amount of $434.97 million last year. Of which, profits and dividends were $227.68 million, accounting for 52.37 percent; investment capital recovery was $132.4 million, accounting for 30.44 percent; interest revenue was $7.42 million, accounting for 1.71 percent.

Of these, 95.39 percent of remittances were from projects of PVN with $300.94 million and Viettel with $113.7 million. Six other enterprises remitted $20.34 million, while 18 enterprises did not have capital recovered and remitted in 2019.

By December 31 last year, ten out of 27 enterprises had recovered their investment capital from overseas projects with a total amount of over $2.98 billion, equal to 45.72 percent of the implemented investment capital. Of which, PVN had recovered more than $2.11 billion, accounting for 61.38 percent of implemented investment capital; Viettel had recovered $810 million, accounting for 45.12 percent of the implemented investment capital; eight groups and corporations, including VRG, VNPT, Petrolimex, Vinachem, COECCO Corporation Company, Mobifone Corporation, and Vietnam Aviation Corporation, transferred $56.45 million back to the country.

In 2019, there were 87 out of 130 projects reporting revenues and profits with total overseas revenue of more than $7.02 billion, equal to 127.16 percent compared to that in 2018. Of which, 53 projects were profitable, with a total profit of $565 million, an increase of $39 million compared to that in 2018.

More than 30 projects reported a total loss of $156 million, down $201 million, and equal to 43.74 percent compared to that in 2018. The distributed profit in the year of Vietnamese investors was $206.3 million, down $25.04 million, and equal to 89.18 percent compared to that in 2018.

Among overseas investment projects, 47 projects suffered accumulated losses with the total accumulated losses of more than $1.04 billion. However, some projects have not reported revenues and profits, so there is no basis for the evaluation of the investment efficiency of these projects.

According to the Government, some projects have faced difficulties, potential risks, and shortcomings, and poor investment efficiency, including oil and gas exploration and exploitation projects that have had to stop, reschedule, or carry out procedures for termination of investment projects; rubber plantation and processing projects, of which, some projects are still in the investment phase or have just been put into operation and are suffering losses following their plans, contain potential risks of land policy, taxes, and labor, and market risks.

Some telecommunications projects have had large cumulative losses, or lost control, and contained exchange rate risk. Some ineffective projects in other fields are still active or stopped. For instance, the potassium salt mining and processing project in Laos and the project to establish the Cambodian national airline are also subject to regular supervision.

In general, the outbound investment activities of State-owned and State-invested enterprises have not met the expectations. Besides objective reasons, such as politics and investment policies in the host country, the subjective causes are the issues of management capacity, risk management, market forecasting capacity, and experience in overseas investment, the report said.

By Anh Phuong – Translated by Gia Bao

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