The government of Vietnam said it will provide interest-free loans to state-owned shipbuilding company Vietnam Shipbuilding Industry Group (Vinashin) to pay wages, after the company was unable to make the first repayment on a $600-million loan to Credit Suisse.
The loans, provided by the state-owned Development Bank of Vietnam, a state-run lender that funds national projects, and Vietnam Bank for Social Policies, a government lender for social welfare programs, will also pay for unemployment compensation and social, health and unemployment insurance.
The government also provided the company significant tax concessions.
Vinashin, one of the country’s biggest companies with tens of thousands of employees, is in the midst of a restructuring program after almost going bankrupt and incurring debts of about $4.5-billion.
However, the government indicated that it will not bail out the ailing shipbuilder.
Moody’s and Standard & Poor's Ratings Services recently reduced Vietnam's long-term sovereign credit ratings, citing, among other things, that exposure to Vinashin could damage the creditworthiness and balance sheets of some Vietnamese banks.
Last August, the former boss of Vinashin was arrested for mismanagement in connection with the firm’s near-bankruptcy.
Pham Thanh Binh was suspended from his job in July.
The most significant failing in the management of the group was its investment policy, which led it to the brink of failure, the government said at the time.