HANOI: Railways continue to face a stern challenge within the transportation market, not solely due to outdated infrastructure, but predominantly owing to their lack of competitive edge and inefficiencies in organisational structure, with a particular emphasis on the transportation sector.
The Commission for the Management of State Capital at Enterprises (CMSC) has recently presented a report to Deputy Prime Minister Le Minh Khai, seeking approval for the scheme to reorganise the Vietnam Railway Corp (VNR) by the year 2025.
This scheme, originally formulated in 2016, has undergone multiple revisions and submissions, yet has not received approval.
This delay is partly attributed to the transfer of responsibility for the railway “behemoth” to the CMSC in November 2018, resulting in a backlog of tasks requiring clarification.
It was only after the prime minister released a document in April of the previous year, outlining the strategy for restructuring enterprises under the VNR, that a fresh direction for the entire sector began to emerge.
In the execution of this document, VNR has streamlined its rather unwieldy structure, reducing the number of focal points within the locomotive enterprise branch from five to three, transferring the status quo of all ongoing activities, assets, and personnel from the three railway management boards of Area 1, 2, and 3 to a single railway project management board.
This board is tasked with performing the role of investor representative, overseeing railway projects financed by VNR, whilst also concluding the operations of the other two project management boards.
As it stands, the only remaining task is to amalgamate the Hanoi Railway Transport JSC and Saigon Railway Transport JSC into a single joint-stock company.
Reflecting on the performance results from 2016 to 2020, the CMSC reports that the average targets, as outlined in the strategy, production and business plan, and five-year development investment plan for this period, have largely not been met. This includes the annual listings of group A and B projects.
The rail transport market share remains low, railway enterprise competitiveness is frail, and the proportion of non-public output from railway maintenance management joint stock companies is not substantial.
Additionally, the quality of industrial products is merely satisfactory, railway infrastructure continues to be outmoded, and the solidity of railway traffic safety is questionable.
Over this period, the entire corporation achieved a total revenue of 38.6 trillion dong, with an average pre-tax profit of 149 billion dong per annum. This does not take into account the loss of over 1.3 trillion dong in 2020, a direct consequence of the severe repercussions of the Covid-19 pandemic.
The amount paid to the state budget from fees and charges is 1.48 trillion dong, ensuring fulfilment of obligations to the state.
Prominently, the organisational structure of VNR throughout this period has manifested numerous shortcomings, including internal rivalry and the dispersal of resources owing to the inability to divest capital from certain joint stock companies.
This is in conjunction with a sizeable workforce yet low productivity, as assessed by CMSC.
Additionally, due to unprofitable operations, VNR recently augmented its charter capital to 3.1 trillion dong, which is 146 billion dong lower than the approved capital.
This is primarily attributed to the adverse effects of the pandemic; as a result, VNR has not yet balanced its capital sources.
Moreover, there are issues related to the mechanism for deploying capital from the budget for maintenance and investment in developing railway infrastructure.
The investment capital from the budget dedicated to railway infrastructure development trickles down at a mere 2% to 3% of the entire industry. — Viet Nam News/ANN
