Brian Jeffrey
Ministry of Finance Review of Vicem’s Financial Practices
Last July, the Ministry of Finance (MOF) conducted an inspection focused on financial laws and taxation within Vicem and three of its subsidiaries.
As of December 31, 2023, the parent company’s long-term financial investment reached VND13.973 trillion, which was distributed across 31 firms, including 17 subsidiaries, 10 joint ventures, and four other affiliates. This investment represents 93% of the company’s owner’s equity.
The inspection revealed that some of these investments carry significant risks.
By the end of 2023, Vicem had set aside VND3.017 trillion as provisions against losses for seven investment projects.
In the case of Vicem Tam Diep, the company invested VND1.132 trillion but faced a staggering accumulated loss of VND1.126 trillion—equating to 99.5% of its total contributed capital. It has allocated VND1.069 trillion for risk provisions and is currently struggling with financial imbalances and poor debt repayment ability. Vicem has supported this entity with a loan of VND396 billion to address overdue debts.
Regarding Vicem Hai Van, an investment of VND314 billion was noted, amounting to 75.75% of the chartered capital. By the end of 2023, the company reported a loss of VND64 billion, with VND34 billion provisioned against potential risks.
Ha Long Cement JSC saw Vicem’s investment rise to VND1.606 trillion, but in 2023, it reported losses amounting to VND648 billion, resulting in an accumulated loss of VND4.902 trillion. The situation left the company’s shareholder equity at a deficit of VND2.96 trillion, with provisions reaching VND1.605 trillion.
The inspectors noted that the company’s losses are persistent, creating severe imbalances that threaten its operational viability due to inadequate cash flow.
Vicem Song Thao attracted VND516 billion in investment, representing 80.79% of its charter capital. By the end of 2023, this entity reported an accumulated loss of VND312 billion and allocated VND252 billion as provisions.
At Song Da JSC, Vicem’s investment totaled VND12 billion, with a loss of VND3.4 billion in 2023, alongside an accumulated loss of VND232 billion and provisions of VND10.2 billion against risks. Signs of financial instability were also reported here.
For Dong Nai Roofsheet and Construction Material JSC, Vicem’s investment reached VND43.6 billion, which resulted in a significant loss of VND99 billion for the year and an accumulated loss of VND788 billion, while VND41 billion was set aside in provisions.
On a more positive note, Vicem had injected VND96 billion into Dong Nai – Kratie Rubber JSC, which yielded a profit of VND13 billion in 2023, although it still faces an accumulated loss of VND179 billion, with VND4 billion earmarked for provisions.
Beyond these major investments, Vicem has stakes in nine subsidiaries and affiliates that also reported losses for 2023, though they maintain shareholder equity exceeding their respective investment amounts.
In response to the findings, the MOF has directed Vicem and the involved subsidiaries to pay an additional VND11.9 billion in state taxes. This includes VND4.7 billion in corporate income tax and VND532 million in VAT. Specifically, Vicem Hai Phong owes VND3.18 billion in CIT, while Vicem Ha Tien is responsible for VND1.52 billion in CIT and VND532 million in VAT due to irregular promotional practices. The parent company itself is required to repay VND6.69 billion to the treasury.
The MOF has urged Vicem and the relevant firms to review their financial investments in businesses experiencing losses and to guide representatives of Vicem’s capital to work with boards to address financial issues, reduce prolonged losses, and prevent the loss of capital and state resources.
Additionally, inspectors have advised Vicem to implement effective financial oversight on enterprises exhibiting signs of financial distress.
Current Operational Status of Vicem
In the first half of the year, Vicem produced 7.63 million tons of clinkers, which represents 45.1% of the annual target for 2024—a 7.8% decline compared to the same period in 2023. Cement production reached 9.77 million tons, or 45.4% of the planned output, also down by 7.2%.
A report from the Ministry of Construction detailing the execution of tasks over the first six months showed that Vicem recorded a loss of VND863 billion—averaging nearly VND4.7 billion lost per day.
Furthermore, Vicem’s audited consolidated financial records indicate a post-tax loss of VND1,129 billion for 2023, a stark contrast to a profit of almost VND642 billion in 2022.
