Vietnam may spur privatization after $4.5-billion shipyard debt

Vietnam may accelerate plans to privatize and break up state-owned companies after the nation’s largest shipbuilder almost collapsed under 86 trillion dong ($4.5 billion) of debts. “Vietnam’s policy is to speed up the process of equitization,” the state’s name for privatization, said Nguyen Xuan Phuc, chairman of the Government Office, which oversees implementation of state plans. “The Vinashin case won’t slow the equitization program,” he said by phone on Aug. 6. The ex-chairman of Vietnam Shipbuilding Industry Group, known as Vinashin, was arrested last week amid a probe into losses.
Hastening the privatization push may boost management standards at local companies and help the South Asian nation pare a budget deficit that contributed to it being downgraded by Fitch Ratings last month. The government delayed plans to sell stakes in Bank for Investment & Development, Vietnam Airlines and other state-owned companies in the last two years as global stock markets plunged during the worldwide recession.
“Vinashin is a good example of why the equitization process needs to progress more quickly,” said Matt Hildebrandt, a Singapore-based economist at JPMorgan Chase & Co. It will “ensure that credible leaders run and grow Vietnam’s most important companies.”
Pham Thanh Binh, Vinashin’s ex-chairman, was accused of “intentional violations of state regulations on economic management that have resulted in serious consequences,” according to a statement posted on the government’s website on Aug. 4. He was suspended from Vinashin last month before being detained by an investigation agency under the Ministry of Public Security.
Calls to Vinashin’s Chief Executive Officer Tran Quang Vu’s mobile phone Tuesday went unanswered. Binh’s wife declined to comment when visited by Bloomberg News in Hanoi last week.
Binh, 57, had run Vinashin since the company’s formation in 1996, holding posts including general director, chairman and secretary of the group’s party unit, according to Thanh Nien newspaper. The government set up Vinashin by combining shipyards and related companies held by the Ministry of Transport, according to the shipbuilder’s website.