12 weak projects by the Ministry of Industry and Trade: Most of them have been operating stably

VCN- At the seminar on measures to boost the operation of SOEs this morning (18/9), Mr. Dang Quynh Tien - Director of Corporate Finance Department, Ministry of Finance shared the initial results of the removal of difficulties for weak projects.
12 weak projects by the ministry of industry and trade most of them have been operating stably
Mr. Dang Quyet Tien (2nd from left) participated in the seminar.

Recently, Chemical Group (Vinachem) has applied to amend the tax law to apply higher tax on imported fertilizer so that Vinachem's fertilizer prices will be competitive with imported goods, enabling Vinachem to process Poor business (for the poorer business sector). You have proposed the above mechanism of Vinachem. Is this proposal contrary to the principles that managers have identified as placing SOEs in competition operating in the market, and beyond the principle of dealing with 12 weak enterprises that Deputy Prime Minister Vuong Dinh Hue said should be regulated by self-control and self-responsibility in the market?

Regarding VAT on fertilizers, the Ministry of Finance has acknowledged, studied and developed in the process of submitting to the Government and the National Assembly for consideration at the appropriate time, the proposals related to the transfer of fertilizer from Non-VAT taxable objects to be subject to 5% VAT, with the goal of removing difficulties for domestic producers and ensuring that domestic fertilizers compete with imported goods of the same type, not regulated separately for SOEs.

Import tax on fertilizers: Through the exchange with the Tax Policy Department, it has not received the proposal to increase import tax rates for fertilizer. According to WTO commitments, urea (or urea in the form of aqueous solutions) has the highest commitment rate of 6.5%, currently under Decree No. 125/2017/ND-CP. Nitrogenous fertilizers have been subject to the preferential import tax rate of 6% (this tax rate is lower than the WTO commitment by 0.5%, but the tax rate is set at the unit level).

The Ministry of Finance is continuing to synthesize obstacles and difficulties to submit to the Government for consideration and decision for amending Decree No. 125/2017 / ND-CP.

Regarding the handling of 12 weak projects in the Industry and Trade sector, after nearly 2 years of implementation, what is the result compared to the requirements set out for basic treatment in 2020?

On 5 June, 2018, the Government reported the number in 223/BC-CP, sent to the deputies of the XIth National Assembly, and the Party Committee of the Ministry of Industry and Trade reported 61/BC-BCSD, and sent the Standing Committee Secretariat the results of the existing and ineffective projects, slow progress and inefficient enterprises in the industry.

Accordingly, after more than a year of restructuring the weaknesses of the Industry and Trade sector, with the unified direction of the Government, the Prime Minister and the Government Steering Committee, the concerned agencies and units have made great efforts to expeditiously carry out the assigned tasks with a high sense of responsibility, to step by step remove and dismantle difficulties and specific difficulties in the projects. A number of general mechanisms and policies for promoting development in a number of related branches and domains have been studied, proposed and implemented to facilitate the development of a number of branches in the domestic production sector, while contributing to removing difficulties for projects and enterprises.

In particular, tasks assigned by the Ministry of Finance under Decision No. 1468/QD-TTg have been basically completed. Specifically, on the situation and results of production and business activities of the projects and enterprises as follows:

Up to now, there have been two factories producing and trading in DAP No.1 fertilizer - Hai Phong Quy Xa iron ore mining and quarrying project, and Lao Cai iron and steel plant project (Vietnam - China steel plant). The remaining 4 projects have gradually reduced their losses, and their production and business activities have gradually stabilized (including Ninh Binh Fertilizer Plant, Ha Bac Fertilizer Plant, DAP No. 2 Fertilizer Plant - Lao Cai, DQS).

For 3 previous projects which have been halted for production and business activities, one project has been producing, operating in a part of a factory (Dinh Vu polyester fiber factory).

For the 3 previously unfinished projects, Phuong Nam Pulp Plant is carrying out the auction of all assets and inventory, the remaining two projects are now under construction. Strictly implementing the measures to continue the investment projects to be completed and put into use (Phu Tho plantation production project is seeking partners for investment to continue implementation. Extension of phase 2 of Thai Nguyen Iron and Steel Factory is implementing the plan to withdraw state capital to create more active investors to continue investing in the project).

The projects have been put into operation and are more stable than before, and the projects restarting after the production downtime have ensured the maintenance of jobs and livelihoods for thousands of laborers, thus contributing to socio-political stability. At the same time, it creates important premises for the effective and definitive handling of projects in the coming time according to the plan and roadmap.

Together with the overall review and assessment of the current situation, the causes and implementation of solutions for projects, enterprises, inspection, auditing and investigation have been implemented positively and urgently.

All 12 projects and enterprises have been inspected and audited at different levels for detecting violations and violations of laws in each project or enterprise; It clarifies the responsibilities of each concerned organization and individual and strictly handles it according to the provisions of law.

Many projects have legal complications such as Ninh Binh province, Thai Nguyen stage 2. However, it is suggested that if the state sells the project to the private sector, the processing of these legal documents will be faster and eliminate the stagnation of the project. Or as proposed by PVN, to use the Group’s capital to promote processing at Dung Quat Shipyard, PVTEX ... What is your point of view on these comments?

On May 26, 2017, the Party Committee of the Ministry of Industry and Trade submitted to the Politburo in Report No. 01-TTr/BCSD to report on the situation and plan to handle the shortcomings and weaknesses of a number of projects and enterprises that are slow and inefficient in the industry.

On June 17th, 2017, the Politburo held a meeting to listen to and comment on the above-mentioned report and issued the Communiqué of the Communist Party of Vietnam's Notice No. 43-TB/VPTW dated 19/6/2017 about the Politburo’s decision for dealing with the shortcomings and weaknesses of a number of projects and enterprises which are slow and ineffective in the industry and trade.

On the basis of the conclusions of the Politburo and the Prime Minister's directives, the Prime Minister issued Decision No. 1468/QD-TTg of September 29, 2007 approving the scheme on “settlement of outstanding problems, weakness of some projects, slow and ineffective enterprises in Industry and Trade", and Decision No. 4269/QĐ-BCĐĐANCT dated 14/11/2017 on the Action Plan of the Steering Committee for the scheme outlined above for the period 2017 - 2020.

Each project's handling plan shall be formulated on the basis of the actual situation and analysis of pros and cons of each project and submitted to competent authorities for consideration and approval. In particular, for the problems of each project (EPC contract dispute, finalization of project completion ...) are assigned by the Government Ministry of Industry and Trade to direct the enterprises gradually remove.

If there is no suitable restructuring plan, the sale and transfer of Phuong Nam Pulp Plant will be approved.

During the implementation of the restructuring plan, the Government continues to direct the implementation review to optimize the restructuring plan and submit it to the competent authority for approval.

Particularly on the proposal of PVN to use the capital of the Group to promote the treatment at DQS, PVTex ...: At Point a, Clause 1, Article 1 of Decision No. 1468/QD-TTg dated 29/9/2017 of the Prime Minister. Approving the project on handling shortcomings and weaknesses of a number of projects and enterprises which are slow and ineffective in the industry and trade sector, stating: "Resolutely handling the weak and inefficient projects and enterprises according to the principle and market mechanism; respect the principle of self-control and self-responsibility of enterprises; The State insists on not granting more capital to projects and enterprises".

Delayed and ineffective enterprises in the Industry and Trade sector operate in different forms (one-member limited liability companies, joint-stock companies...). Therefore, the state shareholders vote together with other shareholders to increase capital, additional resources... should ensure compliance with the provisions of the above laws. At the same time, the increase of capital and the replenishment of resources must be appropriate and used for the right purposes according to the approved disposal plan.

Council of members of the State shareholders (Vietnam Oil and Gas Group, Vietnam Chemical Group, Vietnam Paper Corporation,...) and the Ministry of Industry and Trade are responsible for supervising the supplementation of capital, properly and effectively in accordance with the provisions of law.

In fact, in the case of DQS, according to PVN's report, as of 31 December, 2017, PVN has supplemented DQS with 1,990 billion VND of chartered capital and 3,469.59 billion VND of debts (currently which are recognized as receivable debts).

However, as of 31 December, 2017, the accumulated losses of DQS amounted to 3,726.3 billion VND, the owner's equity was minus 1,159.9 billion VND, total liability was 6.816 trillion VND, while total assets are 5,656.3 billion VND. DQS has been financially unbalanced, incapable of paying its due debt, operating entirely on loans and finance and fell into bankruptcy. In the case of PVTex, it operates in the form of a joint stock company, which has a stake in PVN.

The proposal of additional capital to handle the existence of PVTex is based on the decision of the General Assembly of Shareholders. Currently, PVTex is not clear how long it will be able to operate 100% of the plant capacity, the feasibility of the output; loss/profit after operating 100% of the project; Plans for settlement of disputes with contractors...

Thank you Sir!

By Hong Van/ Huu Tuc

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