Monday,  Feb 18, 2019,06:37 (GMT+7) 0 0
VNR to keep divesting its subsidiaries
By Le Anh
Tuesday,  Jul 31, 2018,13:57 (GMT+7)

VNR to keep divesting its subsidiaries

By Le Anh

Passengers get on a VNR train. VNR wants to continue the divestment of its subsidiaries to boost efficiency - PHOTO: LE ANH

HCMC – Vietnam Railway Corporation (VNR) wants to continue the divestment of its subsidiaries, aiming to improve competitiveness and attract investors to enhance efficiency after three years on a downward spiral.

A report on the results of the first six months of 2018 from VNR shows that all of its business indicators are on the rise, with revenue amounting to some VND4,000 billion, up 17.8% year-on-year, and with profit reaching VND106 billion.

According to the report, the growth in revenue results from a series of renovation solutions for railway services, including replacing new cars, flexibly increasing and decreasing ticket prices depending on the market demand and linking to the tourism sector to attract passengers in groups.

As railway transport models are still facing challenges, VNR has been forced to continue rearranging and restructuring its mechanisms and activities to sustain its operations and develop further.

Besides this, the corporation will constantly divest its subsidiaries. In particular, VNR has contributed capital to three transport firms, of which Hanoi Railway Transport JSC (Haraco) holds a 94% stake, Saigon Railway Transport JSC 74% and Railway Transport and Trade JSC (Ratraco) 34%.

In spite of being joint stock companies, Hanoi Railway and Saigon Railway are still VNR’s subsidiaries. However, both companies have affected VNR’s general efficiency since the two have suffered the pressure of revenue and competitiveness, resulting in internal conflicts.

VNR therefore proposed separating cargo transport firms from passenger transport enterprises. As scheduled, VNR will divest passenger transport enterprises and keep a controlling stake of 51% or more, while the corporation will sell all stakes in cargo transport firms without keeping any controlling stake, to attract outside investment.

Currently, some enterprises are showing interest in investments in trains to offer transport services on major routes such as Hanoi-Lao Cai and Hanoi-Danang. Other firms would prefer to set up a transport company under a model similar to that of the current railway transport company but are facing difficulties with procedures.

According to enterprises, to obtain a business license, they are required to meet various conditions including providing safe vehicles, hiring an operator, hiring trained staff, and maintaining a system that ensures safety. Due to complicated procedures regulated by the State, few enterprises fund the railway sector.

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