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Thursday, June 20, 2024

VNR moots merging Hanoi and Saigon Railway Transport JSCs

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HCMC – The Vietnam Railway Corporation (VNR) has proposed merging the Hanoi and Saigon Railway Transport JSCs to reduce costs.

VNR Chairman Vu Anh Minh said the corporation had submitted the restructuring plan to the competent agencies, the local media reported.

Both the Hanoi and Saigon Railway Transport JSCs are operating passenger and cargo transport segments, leading to unfair competition and high operation costs. For example, the Saigon Railway Transport JSC has staff at 50 stations and so does the Hanoi Railway Transport JSC, causing wastefulness in terms of costs and human resources.

Under the restructuring plan, five locomotive factories will be merged into two to reduce costs over materials and manpower. With the plan, there is no need to auction assets and end contracts with employees.

According to Minh, in 2020, Covid-19 and storms in the central region prompted the number of railway passengers to tumble. VNR earned a revenue of only VND6.8 trillion last year, equal to 79% of that in 2019.

Of the total, the parent company generated over VND1.7 trillion, equal to 66% of its revenue in 2019. Thus, the parent company was estimated to incur losses of more than VND1.32 trillion.

Without policies to remove difficulties, specifically the restructuring, VNR may lose its entire equity of VND3.25 trillion. The company has tightened control over expenditures, Minh added.

Earlier, VNR had more than 40,000 laborers. After the equitization in 2015, the number fell to 26,310. Of the total, Hanoi Railway Transport JSC had 4,000 employees and Saigon Railway Transport JSC had over 2,000.

Under the restructuring plan, the number is expected to be cut by 300-400. At present, a railway staff member’s average salary is VND8.2-8.5 million per month.

The restructuring plan was completed in 2017 but VNR was later handed over to the Commission for the Management of State Capital at Enterprises and was no longer under the management of the Government, so it had to make the proposal again.

Minh said the restructuring is in line with market developments. In the 2016-2020 period, the firm restructured to improve its production and business capacity, equitize itself and serve the divestment of the State capital.

Its next restructuring was to reduce the unfair competition among units in the same business lines.

Deputy Minister of Transport Nguyen Ngoc Dong said to execute the restructuring plan, VNR must rearrange its organization to operate effectively and renovate its governance, focusing on the human factor.

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