Transport Ministry gives ‘go ahead’ to Vietstar Airlines, Finance Ministry pulls back
After four years of operation, Vietstar Airlines wants to increase its charter capital and expand the fleet. However, two ministries cannot reach agreement on the issue.
Chair of the government office Mai Tien Dung, when asked about the licensing of Vietstar Airlines at a recent press conference, said the office was still collecting opinions from relevant ministries and branches to submit to the Prime Minister for approval.
The fate of Vietstar Airlines still has not been determined because two ministries which have an important voice – the Ministries of Finance (MOF) and Transport (MOT) – have different opinions on whether to license the air carrier.
The problem lies in the appraisal of Vietstar Airlines’ financial capability.
Under Decree 30, the air carriers using less than 10 aircraft must have charter capital of VND700 billion at minimum. If they contribute capital in cash, they must obtain bank documents certifying that equivalent amounts of money have been set aside at bank accounts.
If they contribute capital in property, they must show documents from authorities stating the value of the properties.
Meanwhile, Vietstar, when applying for licensing, submitted an audited financial report by December 31, 2015 instead of the document certifying the capital contribution.
The audited financial report showed that Vietstar’s stockholder equity was VND652.7 billion by the end of December.
Since the air carrier spent money on activities in the first phase of operation, it still needs to have VND47.3 billion more.
Vietstar committed to add VND47.3 billion once the Prime Minister agrees on granting license to it.
MOT believes that the document is lawful.
Meanwhile, MOF refused to license Vietstar, saying that the air carrier cannot meet the requirements stipulated in the Decree 30.
The capital contribution by Vietstar, according to MOF, has only been confirmed by the HCM City Planning and Investment Department, while there is no other document showing that Vietstar can satisfy all the requirements on capital contribution.
Nguyen Dinh Cung, head of the Central Institute of Economic Management (CIEM), thinks that MOF has a rigid understanding about the issue.
In this case, Vietstar Airlines has the audited financial report which shows its total assets, and that is enough.
He said that enterprises will have to pay more to join the market if they have to have VND700 billion in their accounts blocked at banks.
Luong Hoai Nam, deputy CEO of Vietstar Airlines, said MOF has made it difficult for the air carrier’s operation when refusing to grant a license.
He said that businesses would miss opportunities because of the different ways of interpreting legal documents.
Meanwhile, the Ministry of National Defence agrees with MOT that it is necessary to license Vietstar Airlines.