Bad debt of state-owned enterprises accounts for 70% of the entire system.

Bad debt of state-owned enterprises is estimated at about 200 trillion VND; of economic groups and corporations is about 153 trillion VND.

In the speech of Dr. Dinh Tuan Minh at the Autumn Economic Forum held recently in Ba Ria - Vung Tau, it was pointed out that: bad debt in the state-owned enterprise sector is very large. The latest figures show that the state-owned enterprise sector currently contributes to 70% of the bad debt of the entire system, in which economic groups and corporations account for 53% of the bad debt.

200,000 billion VND of bad debt belonging to state-owned enterprises

According to the report submitted to the National Assembly Standing Committee in September 2012, “State-owned enterprises using credit capital account for about 70% of total bad debt, of which economic groups and corporations account for 53% of bad debt”. If the bad debt of the system is estimated at 10% of total outstanding credit, as announced by the State Bank, then the bad debt of the State-owned enterprise sector will be estimated at about 200 trillion VND and the bad debt of economic groups and corporations will be about 153 trillion VND.

According to the 2012 State-owned Enterprise Sector Restructuring Project of the Ministry of Finance, the outstanding debt of 80/96 State-owned corporations and groups by the end of 2010 was VND872,860 billion, equal to 1.6 times the owner's equity. As of September 2011, the outstanding bank loans of large State-owned enterprises reached over VND415,000 billion, equivalent to nearly 17% of the total outstanding credit at banks (loans of 12 State-owned economic groups amounted to nearly VND218,740 billion) and the largest outstanding debt belonged to "big names" such as the Oil and Gas Group (PVN - VND72,300 billion), Electricity (EVN - VND62,800 billion), Coal & Minerals (Vinacomin - VND19,600 billion).

EVN is at the top in terms of credit balance.

“With the above figures, bad debt of the Group and General Corporation sector in the banking system will account for 30-35% of the total outstanding debt of this sector,” emphasized Dr. Dinh Tuan Minh.

Although the debt-to-equity ratio of SOEs has tended to decrease in recent years, it was still at 2.52 times in 2009, much higher than the 1.78 times of the private sector and the 1.39 times of the FDI sector. Central SOEs had an even higher ratio, up to 3.53 times.

Dr. Dinh Tuan Minh cited data from the State Bank of Vietnam, bad debt (group 3,4,5) in the banking system based on reports from credit institutions in the first 6 months of 2012 increased sharply to 4.6% from 3.72% in 2011. However, based on the State Bank of Vietnam's assessment, bad debt is estimated at about 8.6%.

Overdue debt (group 2) of most banks increased sharply at the end of 2011. Overdue debt reported by credit institutions at December 31, 2011 accounted for 11.09% of total outstanding loans and increased by 3.32% compared to 2010. Certainly, a part of overdue debt at the end of 2011 will turn into bad debt in 2012.

What is worrying is that the overdue debt of the state-owned commercial bank group was at a relatively high level of 13.36% at the end of 2011, a significant increase from 10.43% in 2010. According to the National Financial Supervision Committee, by the end of 2011, the overdue debt of this group accounted for 61% of the total overdue debt of the entire market (while this group only accounted for 50.64% of the credit market share).

The solution must be systemic.

Dr. Dinh Tuan Minh admitted: “Bad debt in the SOE sector is very difficult to resolve. Unlike private enterprises, which can easily sell assets or transfer shares to other enterprises to have money to pay off bank loans to avoid bankruptcy, SOEs find it very difficult to sell assets or state shares at market prices during economic downturns. Therefore, the debts that SOEs borrow often have to rely on state budget support in the form of debt cancellation, debt freezing, debt transfer, capital supplementation…”

According to Dr. Dinh Tuan Minh, the handling of bad debts in the banking system of Vietnam needs to be closely linked to the process of restructuring the economy, including restructuring the state-owned enterprise sector, restructuring public investment, and restructuring the system of credit institutions. This is necessary because of the characteristics of bad debts in Vietnam, especially in the aspects of bad debts in Vietnam associated with the model of extensive investment and the state-owned enterprise sector. The purpose is to ensure that after the current period of bad debts is resolved, this phenomenon will not recur.

In the current situation, Dr. Minh's opinion is that a national bad debt trading fund should be established. Due to the characteristics of Vietnam's bad debt, which is bad debt from large state-owned enterprises, mostly real estate as collateral, and overlapping ownership, it is possible to combine the solution of self-resolving with the solution of establishing a special company for bad debt trading.

Dr. Dinh Tuan Minh also recommended that Vietnam should not use debt cancellation solutions at the present stage because although they are state-owned enterprises or state-owned commercial banks, these economic organizations have all operated according to the Enterprise Law, either as joint-stock companies or as LLCs. Debt cancellation at state-owned enterprises will result in private enterprises with direct or indirect shares (through joint-stock companies of state-owned enterprises) benefiting.

“Vietnam should first establish clear principles and laws to gain social consensus in forming a centralized, national institution to handle bad debt,” Mr. Tuan Minh emphasized./.

According to (vov.vn)-LT