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“Vinachem Ordered to Intensify Governance Restructuring Efforts, Both in Terms of Personnel and Apparatus”

23 August, 2024

On August 22, in Hanoi, Prime Minister Pham Minh Chinh attended the ceremony celebrating the 55th anniversary of the Vietnam Chemical Industry (August 19, 1969 – August 19, 2024) organized by the Vietnam Chemical Group (Vinachem).

Chairman of Vietnam Chemical Group Phung Quang Hiep affirmed that the Group will continue to play a pivotal role in Vietnam’s chemical industry, striving to become one of the leading groups in the ASEAN region in the field of chemicals. – Photo: VGP/Nhat Bac

In his speech at the ceremony, Chairman of Vinachem Phung Quang Hiep stated that the past 55 years have been a challenging journey, but the industry has also achieved notable accomplishments and played an important role in the industrialization and modernization of the country.

The Vietnam Chemical Group has been awarded numerous honors by the Party and the State, including two Ho Chi Minh Orders, the First-Class Labor Order, and the First-Class Independence Order.

Moving forward, Chairman Phung Quang Hiep affirmed that the Group will continue to play a pivotal role in Vietnam’s chemical industry, staying ahead of the curve in technology and actively integrating into the global economy. The Group aims to enhance its reputation and influence in the region and strive to become one of the leading groups in the ASEAN region in the field of chemicals.

From Business Losses to High Revenue and Profit

Speaking at the event, Prime Minister Pham Minh Chinh emphasized the importance of the chemical industry as a fundamental economic and technical sector, making significant contributions to the country’s socio-economic development.

“We have accomplished our mission over the past 55 years, but the mission ahead is even more challenging and demanding. We must overcome these challenges and fulfill our mission,” the Prime Minister stressed.

Looking back at the historical journey, the Vietnam Chemical Industry was established and developed alongside the country’s construction and defense during the resistance wars against the French and the Americans. The industry aimed to meet the needs of the resistance wars, focusing on three important goals: national defense, agriculture, and civil life.

On August 19, 1962, the Lam Thao Superphosphate Fertilizer Plant, the core unit of the chemical industry (now Vinachem), was honored to receive a visit from President Ho Chi Minh just two months after it began operations.

On August 19, 1969, the General Department of Chemicals was established, marking a significant milestone in the development of the chemical industry. Despite limited resources, the industry’s products, such as fertilizers, building materials, rubber, batteries, accumulators, and various chemicals, became a source of pride and a testament to the achievements and growth of the industry’s officials and workers.

Entering a new phase of development, at the end of 1995, the Vietnam Chemical Corporation was established, and in 2009, the Vietnam Chemical Group (Vinachem) was founded.

Along with the new organizational model, Vinachem continued to uphold the proud traditions of the industry, maintaining its leading position in the production of fertilizers and basic chemicals. The Group supplied over 45% of various types of fertilizers and 46% of basic chemicals, continuously improving production technology to ensure the safety of workers and protect the environment.

However, during the period from 2015 to 2021, several large-scale projects and enterprises under the Group experienced production and business losses and inefficiencies. As a result, the Group’s overall performance declined, market share shrunk, debt increased, and the morale of workers fluctuated.

Nevertheless, since the beginning of this term, under the close direction of the Government, the Prime Minister, and the Steering Committee for handling the problems of several slow-progressing and inefficient projects and enterprises under the Ministry of Industry and Trade, along with the concerted efforts of ministries, agencies, and units, and the determination of Vinachem, the Group has made progress in restructuring four fertilizer projects and enterprises with slow progress and inefficiencies (Ha Bac Fertilizer, Ninh Binh Fertilizer, and DAP No. 1 and No. 2) out of 12 problematic projects. These enterprises have now turned a profit and fully repaid their loans to the financing banks…

From operating at a loss, the Group has now turned a profit, with revenue and profit reaching historic highs in 2022 and 2023. Vinachem has firmly established its role as the pillar of the country’s chemical industry, making significant contributions to the country’s sustainable development.

In 2023, the Vietnam Chemical Group’s revenue reached over VND 57,000 billion, with a profit of nearly VND 3,300 billion. The Group provided employment for nearly 20,000 workers across 21 member units, 11 affiliated companies, 4 subordinate units, and auxiliary units. In the first six months of 2024, the Group’s estimated revenue was nearly VND 31,000 billion, with a profit of nearly VND 870 billion. The average monthly income per person was over VND 13 million.

On behalf of the Party and State leaders, the Prime Minister congratulated and commended the chemical industry for its achievements and efforts over the past 55 years, contributing to the country’s overall achievements in building and defending the Socialist Republic of Vietnam.

Along with the significant accomplishments, the Prime Minister pointed out that the chemical industry is facing several challenges: (i) mainly providing common products with few high-tech chemical products and value-added offerings; (ii) dependence on imported raw materials and input chemicals; (iii) the presence of small, outdated production facilities; (iv) insufficient attention to scientific research, technological improvement, and competitiveness; and (v) environmental pollution, leading to fear and resistance in some localities and communities.

The Prime Minister emphasized that the experiences and lessons learned from the past 55 years, especially the determination to overcome difficulties and challenges, are invaluable in achieving socio-economic development goals, including the development of the chemical industry.

Accordingly, it is essential to embrace innovative thinking and a strategic vision. Resources stem from thinking, motivation arises from innovation, and strength comes from the people. Vinachem has successfully transformed its development model, aligning with the energy transition and the impact of the Fourth Industrial Revolution, with the following principles: clear thinking, strong determination, and great effort. Calmness and unity are crucial in finding solutions that are practical, realistic, and grounded in reality.

It is vital to foster true unity and democracy, promote the leading role of the Party, and emphasize the responsibility of leaders. Encourage a daring spirit among officials and civil servants, especially those in leadership positions, to undertake tasks for the common good.

Additionally, close and effective coordination with authorized agencies, enterprises, and partners is essential, ensuring harmonious interests, shared risks, and a balance between the interests of the State, the people, and businesses.

Investments in seizing new opportunities, particularly in the context of the energy transition, digital transformation, and green and sustainable development, should be prioritized.

Empowerment through decentralization and delegation of authority, coupled with resource allocation and enhanced monitoring, supervision, and encouragement, is key. Building on the proud traditions and foundations established over the past 55 years, the industry should embrace self-reliance and self-improvement, daring to think and act, taking timely and proactive initiatives without relying on others.

More Determination and Vigor in Restructuring

The Prime Minister highlighted the significance of the chemical industry as a foundational sector in every country’s economy and the world’s fifth-largest manufacturing industry. The Resolution of the 13th Party Congress set forth the task of developing several foundational industries (energy, mechanical engineering, metallurgy, chemicals, and materials). Resolution 29 (issued by the 6th Plenum of the 13th Party Central Committee) on continuing to promote industrialization and modernization until 2030 aims to “build a strong national industry with new production capacity, autonomy, high adaptability and resilience, and a focus on mastering core and foundational technologies in foundational, priority, and spearhead industries.” This resolution reaffirms the Party and State’s attention to the important role of the chemical industry as a foundational sector.

In the new development phase, with higher and more demanding requirements, the chemical industry faces complex challenges. This underscores the need for the Vietnam Chemical Group to act as a pillar, coordinating and uniting the strength of the entire industry.

The Prime Minister requested Vinachem to be more determined and vigorous in restructuring governance, accelerating digital transformation, effectively mobilizing and utilizing resources, diversifying markets, products, and supply chains, and actively participating in domestic and global value chains. – Photo: VGP/Nhat Bac

The Prime Minister agreed with the Group’s report and the opinions expressed by the delegates. He also emphasized the following key tasks and solutions:

First, continue to propagate and effectively implement the resolutions, conclusions, and directives of the Party, National Assembly, Government, and Prime Minister. Translate these into specific plans and tasks for the Group and its units, with regular monitoring and supervision.

Maintain unity and promote a daring spirit within the Group, with the aspiration to build Vinachem into the core of Vietnam’s chemical industry, possessing strong financial and scientific-technological capabilities and high competitiveness domestically and internationally.

Closely follow the Government, Prime Minister, and the State Capital Management Committee’s orientations and directives, as well as the industry’s development strategy until 2030, with a vision towards 2040. Maximize the role of state-owned enterprises and excel in fulfilling political tasks, making more substantial and meaningful contributions to the country’s renewal, development, and defense.

Second, continue to streamline the apparatus and build a qualified, compact team, fostering unity and a daring spirit. Review and restructure resources, and effectively implement the restructuring of enterprises, equitization, and state capital divestment.

Third, enhance governance and business capabilities befitting a large enterprise with a wide range of operations and significant holdings of the country’s assets and resources. Embrace smart governance, decentralization, and transparency, with a focus on digital transformation. Resolve lingering issues comprehensively.

Leverage the leading role of state-owned enterprises in formulating medium and long-term plans and strategies to achieve a reasonable sectoral structure, capitalize on unique potentials, competitive advantages, and outstanding opportunities. Focus on core business areas, ensuring efficient and sustainable production while protecting the environment and safeguarding workers’ health and community well-being.

Take the lead in researching and investing in new areas within the chemical industry, selectively embracing global trends, and developing future industries, especially modern technology and techniques in emerging sectors such as semiconductors, batteries, and energy storage…

Fourth, maintain a healthy financial structure and balance financial resources to meet production, business, and investment development needs. Establish and strengthen relationships with reputable domestic and international banks to secure capital for the Group and its members. Attract foreign direct investment (FDI) and other economic sectors to invest in the Group’s projects, leveraging the 55-year legacy in the chemical industry, with a focus on infrastructure and environmental protection.

Fifth, actively innovate and restructure the Group’s units in line with the industry’s development orientation to better fulfill the role of uniting and promoting the strength of the industry’s enterprises. Aspire to become a strong economic group, capable of competing regionally and globally.

Continue to restructure the three underperforming projects (Ha Bac Fertilizer, Ninh Binh Fertilizer, and DAP No. 2) according to approved schemes, ensuring efficiency.

Sixth, promote research and development and apply advanced solutions, technologies, tools, and materials to enhance labor productivity, competitiveness, and environmental protection. Contribute to the sustainable and long-term development of the chemical industry.

Seventh, closely coordinate with authorized agencies, enterprises, and partners in implementing tasks and goals, promoting the country’s industrialization and modernization.

Eighth, improve the material and spiritual life of workers and actively engage in social welfare activities.

The Prime Minister requested Vinachem to demonstrate more determination and vigor in restructuring governance, accelerating digital transformation, effectively mobilizing and utilizing resources (especially capital), restructuring raw materials to increase the use of domestic sources, diversifying markets, products, and supply chains, and actively participating in domestic and global value chains.

The Prime Minister expressed his belief that with the right strategy, synchronized plans, and dedicated efforts, along with unity and a sense of responsibility, the Vietnam Chemical Group will build on its 55-year tradition, successfully fulfill its assigned tasks, and make more significant and meaningful contributions to the country’s industrialization, modernization, renewal, development, defense, and protection.

Nhat Quang