Cao Si Kiem, president of the Viet Nam Small and Medium Enterprises Association, talks to Ha Noi Moi (New Ha Noi) newspaper about incentive policies
Some reports say that the Government's policy to support Vietnamese enterprises has had a positive impact on the nation's economic recovery. Would you agree?
Generally speaking, there are several factors behind some of the economic successes seen since early 2014: the restructuring of weak banks, helping them avert bankruptcy and reduce the deposit interest rate; stabilisation of the gold market and the exchange rate; and restoring demand-supply balance in foreign currencies.
The Government's supporting policies, including tax breaks, have helped localities and sectors draw up more specific plans, particularly to develop better governance models to manage a market economy.
However, there are also those who say that enterprises still face many challenges. Why is this happening, in your opinion?
In 2014, there have been three main problems that Vietnamese enterprises are facing: high inventory, bad debt and the frozen real estate sector. These are big hurdles for our economic development. In my opinion, measures introduced by the Government have been situational. Bad debt has kept increasing although the Viet Nam Asset Management Company was created to buy them. Credit growth has remained slow and enterprises still find it difficult to get loans.
Though the Government has introduced a VND30 trillion ($1.43 billion) stimulus package, only about 10 per cent of this has been disbursed. Cumbersome administrative procedures have slowed down the process of economic recovery.
How do you assess enterprises' capacity to absorb capital and settle high inventories, especially in the small and medium sector?
Consumption is still weak, which is a key factor in inventories remaining high. Many enterprises, particularly SMEs are still facing many difficulties. Quite a few of them have had to file for bankruptcy or stop production. Meanwhile, the competitiveness of Vietnamese products in the region and international markets has not improved much. The restructuring of State-owned enterprises has been sluggish.
At the macro level, I have to say that the Government's policies and measures have not been properly implemented, resulting in a gap between policies and reality.
What should we focus on to help enterprises to stand on their own feet?
The first thing we must do is to stimulate consumption. To do this, we need changes at the macro level, including institutional reform, infrastructural development, human resources development and more access to capital for the enterprises. These are important because they will help restore production, without which jobs cannot be created and wages cannot increase. When workers, or the society in general, earn more, they will buy more.
Are there any measures in the pipeline to settle for good the problem of bad debts?
To settle bad debts, there are three things we have to do immediately. First, we have to sell them and continue lending money to the enterprises. Secondly, we have to create a reserve fund to deal with risks. And finally, we have to stop this problem from rearing its head again.
The Government has adopted some specific measures to support enterprises, particularly those making special products. What's your position on this?
At present, banks are sitting on a large sum of money, but borrowers cannot access it as the latter have failed to meet the banks' requirements.
Meanwhile, the Government supporting policies to enterprises, for example the lending package to fishermen, building houses for workers or the VND30 trillion package for low income households to buy houses of their own and other such schemes have not yet been successfully carried out. In my opinion, the bottleneck here lies within the administrative procedures.
Are there any macro measures that can speed up disbursement in such schemes?
There are three: the National Assembly should speed up their legal compilation process, particularly laws to do with economics; the Government should issue guidance documents faster so that laws can take effect; and finally, the work of overseeing and inspecting should become more effective, particularly those relating to waste and similar negative phenomena. — VNS