At a time when many Vietnamese state-owned enterprises (SOEs) are struggling to find capital to resolve the bad debt issue, the finance ministry said some 30 billion yen, or US$300 million, is waiting to be disbursed to buy their liabilities.
Dang Quyet Tien, deputy head of the Corporate Finance Agency under the ministry, said SOE restructuring is among the top priorities for the seven assistance packages the Japanese government has recently pledged to support Vietnam with.
“The finance ministry is currently working with the Japanese International Cooperation Agency (JICA) over an agreement in which Japanese businesses will help local SOEs restructure by buying their debts,” he said.
Specifically, JICA will help boost the financial muscle of the Vietnamese agencies in charge of trading bad debts, namely the Debt and Asset Trading Corporation (DATC) and the Vietnam Asset Management Corp (VAMC).
Japanese investors, both public and private, will buy bad debts from Vietnamese SOEs, thus enhancing their restructuring process.
“It is estimated that some 30 billion yen will be pumped into this plan,” Tien said.
Tien added that Japanese investors are interested in the electronics and shipbuilding industries, as well as the beverage and confectionary sectors.
The VAMC is also buying bad debts from local state-run enterprises by issuing special bonds, and Tien said the difference between VAMC and JICA programs is that the foreign investors, instead of the local government, will cover most of the debts being traded.
“Moreover, while VAMC and DATC only buy debts of businesses with assets, JICA will classify them into groups with different solutions,” he said.
Debtors with feasible development plans will be restructured, while those with too much debt will be forced to declare bankruptcy.
“Japan has successfully deployed this mechanism for their own SOE restructuring,” Tien asserted.