Vietnam Shipbuilding Industry Group, also known as Vinashin, will fire up to 14,000 employees as the state company undergoes a restructure, reports Bloomberg.
Formed in 2005 after the merging of 200-odd shipping companies, the restructure follows years of trouble for the company.
Intended to be a shipbuilding and industry export powerhouse for the nation, Vinashin accrued debts of over US$4.5 billion, around 4.5 per cent of the entire country's then-gross domestic product.
The company then defaulted on a US$600 million loan in 2010 and came to the brink of bankruptcy.
During this period, Vinashin head Pham Thanh Binh and eight fellow executives were accused of deliberately breaching state regulations on economic management. They were indicted for causing losses of at least VND910 billion (US$43.96 million), including squandering the state budget on the purchase of an Italian-made high-speed passenger boat and the construction of two thermo-power plants.
Analysts blamed the financial debacle on the fact that as the group expanded, it also diversified into non-core industries such as animal feed production, tourist resorts, the finance sector and beer production.
Nine former officials of the state-owned shipbuilding corporation Vinashin received jail terms of between three and 20 years for causing huge losses whilst at the company.
The company plans to initially eliminate 8,000 idle employees and carry out further job cuts later, Bloomberg continued.
Planning to retain about 8,000 positions at the end of its restructuring from over 26,000, the company did not say what it will do with more than 4,000 current workers unaccounted for or when the restructuring will be completed.
Source: Bloomberg
