Two construction conglomerates disbanded
Under Decision 1428 issued by the Prime Minister on Tuesday, six corporations 90 under Song Da and five others under HUD are no longer subsidiaries of these two State economic groups.
Song Da and HUD are now put under management of the Ministry of Construction. Joining them are Vietnam Machinery Erection Corp., Infrastructure Development and Construction Corp., Construction Machinery Corp., Bach Dang Construction Corp., Hanoi Construction Corp., Viglacera Corp. and Vietnam Water and Environment Investment Corp.
Song Hong Corp. and Development Investment Construction Corp. after being equitized will also be handed over to the construction ministry.
The Prime Minister ordered equitization of the aforesaid corporations and preparation of equitization schemes for Song Da and HUD.
Pham Viet Muon, vice chairman of the Government Office, said the Song Da and HUD had failed to form big construction corporations as general contractors dominating the real estate sector.
He said the two corporations were established on merger of smaller units, while reality did not demand such a model. Therefore, the pilot scheme at Song Da and HUD did not foster their development.
In addition, the economic woes greatly affected operations of these two corporations. Sluggish property market and shrinking export market caused grave difficulties for the two firms, said Muon, in explanation for the disbandment of Song Da and HUD.
Meanwhile, according to the construction ministry, Song Da and HUD were incapable of managing subsidiaries of the same or even larger scale.
Therefore, the parent firms did not help their subsidiaries with anything, and the subsidiaries lacked connectivity with the parent firms, especially when the two conglomerates had too many companies under their umbrella. Specifically, Song Da Corporation has 230 subsidiaries and associates, while HUD has 183.
With the disbandment of the two construction groups, there are nine State economic groups left. Earlier, Minister Chairman of the Government Office Vu Duc Dam said the Government would retain only 5-7 conglomerate-type groups, and equitize some others.
In particular, apart from Vietnam Shipbuilding Industry Group (Vinashin) currently under restructuring, Vietnam National Textile and Garment Group will be equitized and the remaining seven conglomerates will grow strong and soon reach the regional level, said Muon.
