Enterprise is in danger of bankruptcy because the project is suspended

Paying bank interest for suspended projects

According to Dang Anh Tu, General Director of Saigon 5 Real Estate Development Joint Stock Company (Saigon 5 Company), the company was officially transformed into a joint stock company on September 1.9.2016, 99,78, but the state still holds 362,154% of charter capital, equivalent to VNDXNUMX billion. The remaining percentage belongs to officers and employees of the company.

From the date of transformation until now, the company has faced many difficulties in production and business activities. The reason is that all the projects under the equitization plan approved by the People's Committee of Ho Chi Minh City are stuck in the land price appraisal, enterprise value determination and adaptation settlement, so they cannot be deployed, seriously affecting the material and spiritual life of employees. Currently, nearly half of the company's employees have quit. At the same time, it greatly affects the preservation of state capital in the company.

Mr. Dang Anh Tu said that at present, Saigon 5 Company only has Binh Dang real estate project in District 8 which is the only project that can be implemented to generate revenue. The company has invested more than VND 250 billion in the project, which started on February 24.2.2018, 7.2019 and has completed the construction of the ground floor. However, until July 5, the project had to suspend construction because the land area had not been updated by the Department of Natural Resources and Environment with the change of the name of the new land-using unit, Saigon 5 Company, on the pink book (currently the pink book is in the name of Saigon Trade Construction One Member Co., Ltd. XNUMX). Therefore, the Department of Construction does not issue a permit to build the body.

For nearly 3 years the project stopped construction, each month the company had to pay interest on bank loans of about 1 billion dong. Up to now, the profit generated is 35,518 billion VND. While the revenue in the first 3 months of 2023 was only 3 billion VND, of which the loss was more than 2,2 billion VND. Therefore, the company is financially unbalanced, there is no cash flow to pay wages to employees and repay bank loans. “From a 100% state-owned company operating effectively with high revenue and profit, stable development over the past 30 years, but when transformed into a joint stock company, all our production and business activities have stalled. All projects could not be implemented, workers' lives faced many difficulties, many key officials quit their jobs, were at risk of bankruptcy, and lost state capital. Although the company asked for help a lot, the departments still did not solve it. We often get discouraged and don't want to work anymore," said Mr. Tu.

Must solve difficulties for businesses

It is known that in order to remove difficulties for the company and avoid loss of state capital, in mid-2021, the People's Committee of Ho Chi Minh City then assigned the Department of Natural Resources and Environment to urgently resolve the update of the name of the land-using unit, Saigon Real Estate Development Joint Stock Company 5, on the pink book issued to the Saigon Trade Construction One Member Company Limited 5 previously. Implementation period in May 5.2021. At the same time, the Department of Construction was assigned to issue construction permits for the body of the work. But so far, everything is still in place.

The Department of Natural Resources and Environment of Ho Chi Minh City said that the proposal of Saigon 5 Company to appraise the remaining asset value at the time of equitization and update the new name on the pink book of the project is not within the functions and duties of this department because the Ho Chi Minh City Police requires the Department to provide documents related to a number of premises managed and used by Saigon Real Estate Corporation - one member limited, which the Company is implementing, including the land area. However, both the Ho Chi Minh City Police, the Internal Affairs Department of the City Party Committee agreed that the Department of Natural Resources and Environment must continue to follow the above instructions of the People's Committee of Ho Chi Minh City in the spirit of ensuring compliance with the law.

Recently, on June 1.6, Vice Chairman of Ho Chi Minh City People's Committee Bui Xuan Cuong, after meeting with departments, including the Ho Chi Minh City Police Department, the Internal Affairs Committee of the City Party Committee, requested the Department of Natural Resources and Environment to urgently consider and resolve the petitions of enterprises under the direction of the People's Committee of Ho Chi Minh City, without delay, affecting or reducing the efficiency of enterprises' investment capital. Saigon Real Estate Corporation – One Member Limited Liability Company is the owner of the state capital contribution and is responsible for “injecting” capital for Saigon 5 Company to operate.

Ms. Phan Thi Hong, Deputy Director of the Department of Finance, admitted that the biggest difficulty of enterprises now is that after equitization, they cannot deploy all projects due to problems in valuation, business valuation and finalization of state capital. Therefore, the company does not have a source of products to trade. This greatly affects the efficiency of using state capital at the company, failing to preserve state capital at enterprises, insolvency, no cash flow to pay employees and repay bank loans, potentially leading to bankruptcy and loss of state capital. From an effective enterprise, now facing the risk of shutting down, state capital will decrease by more than 20 billion VND and there is a risk of further reduction of 1,3 billion VND per month due to overdue interest. “Therefore, the Department of Finance recommends that the People's Committee of Ho Chi Minh City soon solve difficulties for businesses, allowing the Binh Dang commercial-service-apartment project to resume under the direction of the People's Committee of Ho Chi Minh City. At the same time, it is recommended that the State Bank of Ho Chi Minh City consider extending the principal and interest loans for businesses, "Ms. Hong said.