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Vinashin granted tax concessions

Vinashin granted tax concessions

Hanoi: Vietnam has granted tax concessions to nearly-bankrupt shipbuilder Vinashin, writes AFP, after speculation authorities would find a way to help the firm meet a debt deadline. Among the concessions, the state-owned firm will get a grace period until December 31, 2011 for paying its taxes, Tuoi Tre reported, citing the Ministry of Finance.

State-linked Tuoi Tre did not give the amount of tax involved or the period it was due for. The one-year delay coincides with a 12-month deferral Vinashin had reportedly sought for repayment of its international debts.

Vinashin (Vietnam Shipbuilding Industry Group) was due to pay on December 20 the initial 60 million dollar instalment on a $600m loan arranged by Credit Suisse in 2007. Company chairman Nguyen Ngoc Su was quoted in official media on Monday as saying the firm had no way to immediately make the payment and was "still waiting for the final answer" on its deferral request.

Vinashin officials and creditors have refused comment to AFP.

The government has said Vinashin must settle its own debts -- which total at least 86 trillion dong ($4.4bn). Despite those comments, speculation has grown that the government would step in to help Vinashin.

One foreign analyst said Wednesday that he thought the tax concessions were the government's way of indirectly bailing out the firm. "I don't see any other explanation other than helping Vinashin," said the analyst, declining to be named. With the tax concessions, "the money flows (that) you have in the meantime you can use for other things," he said.

The Tuoi Tre report listed four separate tax concession measures, including a deferral of taxes on imported equipment, and the general one-year grace period. Vinashin expects to secure capital to repay creditors through a restructuring of the group but this takes times, Su was quoted as saying in Monday's official media report.

Global ratings agency Moody's last week downgraded Vietnam's government bond rating to B1 -- an undesirable investment -- from Ba3 because of Vinashin's debts as well as other economic factors.  [23/12/10]