A train of the Vietnam Railway Corporation at the Hanoi Railway Station (Photo: VNA) Hanoi (VNS/VNA) - The Vietnam RailwayCorporation (VNR) estimates a loss of nearly 1.4 trillion VND (60 million USD) after tax in 2020, a massiveblow to the company due to impacts of the COVID-19 pandemic.
In the recent filing to the State Securities Commission onbusiness results in the last three years, the corporation expected this year’scombined production and revenue will decrease by 23 percent compared to 2019.
Last year, the corporation posted a consolidated revenue ofmore than 8.3 trillion VND andpre-tax profit of 180 billion VND.
According to VNR, the loss is mainly due to the fallingdemand for transportation and travel as the result of the pandemic and thecorporation’s re-adjustment of its operation to upgrade and repair the Hanoi – HCM City railway line.
Of the 1.4 trillion VND loss, 711 billion VND came from main railway business operation,of which two subsidiaries – Hanoi Railway Transport and Sai Gon Railway Transport – areexpected to record a combined loss of 618 billion VND.
The parent company VNR estimates a loss of 168 billion VND.
Three subsidiaries in the mechanical industries and 20railways joint stock companies are the only firms expecting profits of 75billion VND.
Other burdens include financial losses from previous years,provisional expenses for contingency plans and bad debts worth a combined totalof 682 billion VND. Alsodepreciation and amortisation expenses reached 59 billion VND this year but has no revenueto offset.
In terms of investment, apart from improving infrastructure,VNR plans to invest more than 602 billion VND in locomotive assemblies. The corporationalso seeks to mobilise 414 billion VND from investors to carry out new carriage building project.
According to VNR Chairman Vu Anh Minh, the railway industry is facingfierce competition from other modes of transport, especially low-cost carriersin both air and road transport, while there is a lack of mechanisms andpolicies to boost railway development.
Last year was also a difficult year for VNR when all businessindicators declined.
"The direct infrastructure and the train stations areowned by the Government, but there is no mechanism for enterprises to invest bythemselves,” Minh was quoted by vietnamnet.vn.
“The State does not have capital, businesses have money butcannot spend to invest.”
He cited an example of Song Luy station in Binh Thuan province which needs about 30 billion VND to extend the railway linesand can generate an annual revenue of 200 billion VND but cannot be invested.
Nguyen Thi Phu Ha, Vice Chairwoman of the Committee for Managementof State Capital, said the railway industry still relied heavily on ticketrevenue while its management and competition is weak and infrastructureunderdeveloped.
She has asked VNR to work with ministries and localauthorities to submit to the Government a plan to improve competitiveness andreshape the sector’s development strategy in the future.
Due to the pandemic, the railway industry saw a decline innumber of passengers but still had to maintain operations. Since February,about 3,000 workers have been furloughed or worked only on a shift basis. VNRhas proposed the Government support its business with tax exemptions, feereductions or by freezing debts.
In a move to revitalise the railway industry post-COVID-19,VNR is offering discounted prices and promotion programmes to stimulatedomestic tourism, as well as focusing on more on freight transport.
It plans to operate more international freight trainswith plans to transport fruits and aquatic products directly from southernprovinces to China using refrigerated containers and onward to thirdcountries such as Russia and others in Europe this year./.
VNA
