Friday, August 18 2017

VietNamNews

Businesses, experts consider ways to free up tight credit flows

Update: June, 09/2012 - 07:35

HA NOI — Considering the difficulties that enterprises are facing, measures to unfreeze capital flows were discussed during a meeting held yesterday in Ha Noi by the Viet Nam Chamber of Commerce and Industry.

Businesses which received credit preferences annually account for 12-13 per cent of the total number of operating firms. However, they are mostly large companies in the fields of agriculture, services and state-owned companies.

"It is clear that preferences have not yet focused on small sized enterprises," the chamber's general secretary Pham Thi Thu Hang said. Therefore, state resources concentrated on only medium and large companies, which did not generate as many jobs as smaller ones.

"The things lie in the criteria of small-sized businesses," she said. "If we change the concept of small firms, they will be able to access more capital."

Besides diversifying product range, enterprises should also extend their sources of funding, Hang advocated. "For example, if a company cannot reach a bank, it can totally come to an investment fund." However, getting support from investment funds came along with enhancing corporate governance, she added.

Therefore, she recommended the establishment of a professional corporate bond market, so that funds could join in and help enterprises. "The idea for a small – and medium-sized enterprise support fund was raised years ago but it has not been set up," she said.

The Government should also apply unsecured credit for businesses which have no collateral. In addition, credit guaranteed funds must be improved. "Currently, these funds operate very slowly and lack systematic arrangement," she added.

Meanwhile, interest rates were still claimed to be high. Meanwhile, inventories remained at a high level, with the figure of the processing industry as of April 1 increasing 32.1 per cent compared to the same period last year.

The number of newly established enterprises in the first four months of this year reached around 24,000 companies with a total capital of VND130 trillion (US$6.1 billion), declining 10.5 per cent in terms of quantity and 14.1 per cent in capital over the corresponding period last year. In addition, more than 17,700 businesses dissolved or halted their operation, up 9.5 per cent.

However, according to the chamber's latest survey, involved enterprises forecast that the situation would get better in the last two quarters of the year.

Responding to concerns over interest rate, head of the State Bank of Viet Nam's monetary policy department Nguyen Thi Hong said: "Although some companies claim that interest rates remain high, I think recent reduction is reasonable."

During the meeting, Hong announced that interest rates would continue declining by 1 per cent from next Monday. "We are approaching to dismiss deposit rate ceiling," she added.

Meanwhile, senior economist Le Dang Doanh alleged that enterprises should stop blaming policies. "They'd better restructure themselves to innovate, even when a merger or acquisition is needed." — VNS

Send Us Your Comments:

See also: