The Ministry of Transport plans to inject 100 trillion dong in the Vietnam National Shipping Lines (Vinalines) to rescue the big shipping corporation which has been caught in a shoal. However, experts have expressed their doubts about the rescue plan.

Vinalines gets embarrassed with difficulties 

Vinalines, the biggest Vietnamese shipping corporation, has reportedly bogged down in difficulties. While the number of orders is on the decrease in the context of the global economic crisis, Vinalines’ fleet, which comprises of old ships, has become less competitive. Meanwhile, it still spent a lot of money to buy old ships to… leave them idle.

Since 2007, Vinalines, like other shipping firms, have been put on red alert as the number of orders has been decreasing dramatically and the shipping fees have been decreasing. Experts could not see any opportunities for Vinalines, with its old fleet, named in the Tokyo-MOU black list, to make profits from shipping services.

By the end of 2011, Vinalines had reportedly had 154 ships with the total tonnage of 3.4 million tons, accounting for 45 percent of the total tonnage of the national fleet. Most of them are dry cargo ships, while there are few oil tanker and container ships.

Vinalines, though established as a shipping corporation, has been putting its ships for lease because of the weak competition. This has resulted in the instability in cooperation and the big losses incurred by subsidiaries.

Vosco, for example, reportedly incurred the net loss of 60 billion dong in the first quarter of 2012. In order to ease the loss, it has to sell Dai Viet ship, 37,432 DWT, built in South Korea, to a partner in Singapore, and liquidate Song Tien Ship.

Meanwhile, Vitranschart, in an effort to settle urgent financial problems, had to sell Phuong Dong 1, Phuong Dong 3 and VTC Star in 2011. It plans to sell VTC Light and Vien Dong 3 in 2012 to ease difficulties.

In 2011, Vinaship liquidated three ships out of the fleet of 14 ships, of which fours are over 25 years old.

Rescuing Vinalines, how?

A huge package of 100 trillion dong is expected to be injected in Vinalines from now to 2020 to revive the shipping corporation, which was once the pride of Vietnamese maritime industry.

Under the plan, 30 trillion dong would be disbursed in 2012-2015, so that Vinalines can buy 67 more ships. Meanwhile, it is expected that Vinalines would buy 95 more ships in 2016-2020. As such, the total investment capital for the period would reach 70 trillion dong.

With the plan, the Ministry of Transport cherishes an ambitious plan to increase the total tonnage of Vinalines’ fleet to 15 million tons at least.

However, the ministry’s plan has been described as a “far-away” plan with many unattainable goals.

Vietnam is following a plan to modernize the fleet under which the total tonnage would reach 8.5-9.5 million tons by 2015 and 11.5-13.5 million tons by 2020. However, an expert has pointed out that it’s impossible to increase the capacity to 15 million tons just after several years. Spending a lot of money to buy new ships does not mean that the shipping capacity would be improved. Meanwhile, it’s still unclear where the money for buying ships would come from.

Dr Nguyen Van Thu, former Head of the Transport Programming and Management Institute, also said that after many years of making investment, the total tonnage of the Vietnamese fleet has not reached the 7 million ton threshold; therefore, it seems to be impossible to raise the shipping capacity to 15 million in just some more years.

Source: TBKTVN