Vietnam Railways Corporation predict huge loss amid Covid-19
  • | | January 18, 2021 06:48 AM
The Vietnam Railways Corporation (VNR) may lose all of its VND3.2trn (USD138m) equity if Covid-19 pandemic continues in 2021 and 2022.


Vietnam Railways Corporation predicts huge loss amid Covid-19.

The number of passengers sharply dropped in 2020 because of Covid-19 and severe flooding in the central region. Service quality was also affected by the VND7trn (USD302m) infrastructure repair and upgrade project. The trains had to run very slowly in 50 locations. Sometimes railway sections were blocked.

The number of passengers dropped by 52.5% compared to the previous year while the revenue from passenger transportation decreased by 51.7%. Many train services were temporarily suspended.

Another cause cited for the drop of revenue was the master plan on the development of railway transport in Vietnam sill being reviewed. VNR’s total revenue was VND6.5trn (USD280m), or 78.3% of the 2019’s total revenue. The average monthly income of its employees was VND8.27m, much lower than previous years.

The revenue of the mother company was VND1.7trn (USD73m), or 81.6% of the set goal and 66.6% of the 2019 revenue. Total estimated losses are around VND1.3trn. Revenue from member transportation companies was VND2.9trn, accounting for 97.6% of the set goal and 68.2% of 2019 revenue.

Vu Anh Minh, chairman of VNR, said if Covid-19 continues in 2021 and 2022 and there was no support from the state, then VNR would lose all of its equity. The railway sector has to reform nearly everything from technology to services, human resources and organisational model.

"We have to assess the situation correctly to have the right solution. Even if individual and organisational benefits are affected, we must still carry out reforms in 2022. There may be layoffs," he said.

Deputy Minister of Transport Nguyen Ngoc Dong said the infrastructure couldn't be upgraded in a short time. If the reforms are carried out too slowly, it may result in bad effects. The ministry is planning a 2021-2030 development plan for the railway sector, investing in phases and prioritising urgent investment packages.

Vice Chairwoman of the Commission for the Management of State Capital at Enterprises (CMSC) Nguyen Thi Phu Ha said that there were many difficulties and shortcomings that prevented VNR from operating and developing better. The company has failed to attract the desired investments from the private sector in the past 10 years.

Ha went on to say that it must be stated clearly what assets were given to the VNR so they could have suitable policies to attract private investment.

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