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Publication permit No: 60/GP-TTĐT , April 05, 2010.
SOS: small-scale shipyards on verge of bankruptcy
Date: 4/25/2009 11:40:00 AM
Bank’s tightened monetary policies and higher lending interest rates have pushed shipbuilding enterprises in Xuan Truong district in Nam Dinh province to the wall.
Many shipyards in Xuan Truong district have halted production, while thousands of workers have lost their jobs. Hundreds of ships are lying idle on the Ninh Co River.
Some ships are unfinished and construction has been delayed indefinitely; some others are nearly completed, but the builders plan to demolish them for scrap.
Deputy Head of the Xuan Truong district’s Industry and Trade Sub-department Ngo Doan Tho said that shipbuilders and ship owners are on the verge of bankruptcy as commercial banks have tightened credit and raised lending interest rates. Some banks have even stopped disbursing money under existing contracts signed with ship owners.
Chief of the Secretariat of the Xuan Truong district People’s Committee Doan Nang Vinh said that over 1,500 of 3,000 local workers have been laid off indefinitely as shipyards have halted production. This has put a new burden on the district.
Increased unemployment has not only been occurring in Xuan Truong district. Nam Dinh province as a whole has 4,000 of 11,000 shipyard workers currently unemployed.
Pham Van Bang, Director of Hoang Phong Shipbuilding Joint-stock Company, said: “We have finished building two ships, and we have 13 more ships with the tonnage of between 2,000 and 5,200 tonnes. These ships are half-finished, but we don’t know when they will be finished.”
On average, it takes some VND35bil to build a 2,000-tonne ship. Ship owners usually have to borrow the majority of the sum from banks, but they cannot afford the current interest rates.
The building of a 5,200-tonne vessel, in general, costs some VND80bil. If banks do not disburse money, shipbuilders have only once choice: demolish ships for scrap steel, sell the steel to pay workers and other expenses.
Pham Cong Thuan, Chairman of the Xuan Truong district People’s Committee, said that the biggest problem now for shipbuilders is lack of capital. “We have asked the provincial People’s Committee to help, because this is not only the problem of Xuan Truong district.”
Experts have warned that if the problem cannot be solved, tens of shipbuilding enterprises will fall into insolvency. Of the sum of VND1,781bil enterprises in Nam Dinh province have invested, VND1,037bil comes from bank loans.
If the ships worth tens of billion VND lying in shipyards cannot be completed and taken away by ship owners, many enterprises will go bankrupt.
(Source:TBKTVN)
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