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Phuong Nam Pulp Factory has been continuously stagnant in the auction sessions due to high prices. Photo: Internet

Making valuation too high

Phuong Nam Pulp Factory approved the feasibility report by the People's Committee of Long An Province in 2003, with a total initial investment of VND 1,487 billion, which was adjusted up to VND 3,409 billion. The investor of the factory is the Transport and Industrial Development single share-holder limited company(Tracodi) under the 6 Civil Engineering Construction Corporation – a unit outside the paper industry. After many years of making investments that could not be put into production and business, in June 2009, the project was transferred from Tracodi to Vietnam Paper Corporation (Vinapaco). After receiving the line, Vinapaco began a trial run. However, this project continued to encounter problems and was forced to stop operating from October 2012 until now.

Being shelvedfor many years, Phuong Nam Pulp Factory is a project approved by the Government on the policy of auctioning all fixed assets and inventory of factories. Vinapaco implemented an auction of all fixed assets and inventory of the factory in July 2017 (extended twice in August and September 2017) but failed.

"The auction implementation of Phuong Nam Pulp Factory was unsuccessful due to inadequate valuation of the factory, thus not attracting the interest of investors in the auction. Besides, the other problem is lacking a legal basis to adjust the starting price to continue to implement the project in case the first auction is unsuccessful,” the Ministry of Industry and Trade said.

According to economic expert Vo Dai Luoc, the Phuong Nam Pulp factory was "inadequate" because it was shelved but being valued at thousands of billions of VND, making investors wary.

Organize the sale of projects according to regulations

Regarding the plan for Phuong Nam Pulp Mill project, Deputy Minister of Industry and Trade Tran Quoc Khanh said: “Based on the report of the Ministry of Industry and Trade, the Prime Minister has directed the Ministry of Industry and Trade to co-operate with relevant ministries and agencies to handle the auction of projects in accordance with the provisions of the current law. Currently, Vinapaco has completed the revaluation of the project and submitted to the Ministry of Industry and Trade for approval to continue to develop the plan and organize the project auction implementation as prescribed.”

The Ministry of Industry and Trade saidthe direction to deal with this project is after the Ministry of Industry and Trade approves the valuation results, focusing on building the auction plan and submitting to the competent authorities for approval of the starting price and selling plan to sell the project according to regulations.

Mr. Nguyen Viet Duc, Vinapaco's General Director saidit would be good if the project is sold. In case of failure, Mr. Duc proposed re-valuation from another point of view. The Government established an inter-ministerial working group to consider and evaluate how to attract investors.

According to some experts, with Phuong Nam Pulp Mill project, in order to deal this problem, the selling price must be appraised in accordance with the market, even the incentive to attract investors. The state must accept losses to call for investment. The state also needs to determine the amount of recovered money if not all. It can be seen that the biggest thing when the project has been sold is all the problems will be handled and go into operation, not because of big investment, now selling low prices but delay.