Minister of Construction Nguyen Hong Quan on August 6 submitted to the Prime Minister a plan on setting up two new economic groups, the Vietnam Construction Industry Group and the Vietnam Housing and Urban Area Development Group.

 

According to the plan, the Vietnam Construction Industry Group would be a combination of independent enterprises, mostly operating in the fields of construction and heavy mechanics. The group would have the total assets’ value of 51,139 billion dong and have 81,000 workers. Meanwhile, the Vietnam Housing and Urban Area Development Group would gather enterprises operating in the fields of housing and urban area development, water drainage works and construction material production. The group would have the approximate total asset value of 310,125 billion dong and have 78,000 workers.

 

Vietnam now has eight operational state-owned economic groups: PetroVietnam, Electricity of Vietnam, Vietnam Shipbuilding Industry Group, Post and Telecommunications Group, Vietnam Coal and Mineral Industries Group, Bao Viet finance group, Garment and Textile Group and Vietnam Rubber Group.

 

Under the MOC’s plan, the operational Song Da General Corporation would serve as the nucleus for the forming up of the construction group, while the Housing and Urban Development Corporation (HUD) would serve as the nucleus for the forming up of the urban development group. However, the plan has not been applauded by businesses which could become members of the groups in the MOC’s plan.

 

Pham Hung, General Director of Vietnam Construction and Machinery Installation Corporation (Lilama), said that he knows of no economic group in the world which gathers enterprises in the fields of construction, mechanics and machinery installation. Hung said that if economic groups could be formed by just gathering businesses to get more capital, a lot more economic groups would exist. “Just put one corporation, two power plants and one cement plant together. There would be several billion dollars in capital,” he said. Meanwhile, Hung stressed that capital is not the most important factor. Economic groups need to have high competitiveness and obtain high profitability.

 

Le Van Que, Chairman of Song Da Corporation, the theoretical nucleus of the new economic group, also said that the establishment of economic groups was not simply just a matter of joining businesses. He said that businesses need to join together on a voluntary basis and develop together to improve business scale and financial capability.

 

Other businesses think that the forming up of economic groups is indispensable; however, they also say that it is necessary to choose the right time for this.

 

Vu Khoa, Chairman of the Contractors’ Association, said that Vietnam should not be too hasty to form economic groups. “In the construction industry, the priority job now is to focus on equitising enterprises instead of putting them all together to form up groups which cover both construction and heavy industries,” Khoa said.