Vietnam’s Shipbuilding Company Collapses
Anyone seeking substantial evidence of Vietnam’s unstable economy may want to take a look at the current state of Vinashin, the country’s state-run shipbuilding corporation. What was meant to be Vietnam’s first great leap into the industrial era has turned out to be a major fiasco. Vinashin was the Communist Party’s attempt to lead Vietnam’s economy into the shipbuilding arena. The had hoped to create more heavy industries in Vietnam, with Vinashin at the forefront of this path to modernization. Unfortunately for them, this dream will not become a reality. Vinashin has run up a debt of $4.4 billion, with $600 million of this money owed to foreign investors.
As a state-run company, Vinashin was depending on some government assistance to keep the company afloat. However, at least to the company’s surprise, the government did not come to their assistance. In 2007, the government sent a letter to Vinashin that expressed their support for the company, safeguarding a $600 million loan from foreign investors. This promise meant nothing, it turns out. When Vinashin encountered financial troubles as a result of the recent global recession, the government failed to provide help to the company. As a result, Vinashin was unable to repay its ever growing debts, and drew even closer to bankruptcy.
The incompetence of the Communist government, along with the company’s personnel, have led to the downfall of the shipbuilding corporation. Foreign investors and lenders now believe that they have been cheated by the VCP. With billions of dollars in debt and no sign of improvement, the Vinashin shipbuilding company has no way to repay their investors, who are demanding their money back. Economically, Vinashin is a prime example of how incapable the Communist Party is of building a functional corporation for the country. With no emphasis on creating a professional workforce or the training of competent employment, any attempt by the state to modernize the economy will surely end in failure.