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Input costs must be shaved to save failing enterprises

Update: June, 13/2012 - 08:20

Former Minister of Planning and Investment Tran Xuan Gia spoke to the newspaper Tien Phong (Vanguard) about measures to help enterprises overcome tough economic times.

What is the impact of deep economic recession in Viet Nam?

In my opinion, there are several easily seen impacts. Firstly, it caused macro-economic imbalance. So, the tasks of curbing inflation, stabilising the macro-economy and ensuring social security could hardly be fulfilled.

In addition, rapid economic recession resulted in rising unemployment, which caused social instabilities, while lowering the competitiveness of enterprises.

Finally, the impacts would continue to directly affect the five-year economic development plan and the ten-year socio-economic development strategy.

Export has a tendency to decline dramatically, a significant hint of a slumping trade deficit. How can the situation be improved?

The import-export situation so far this year is not worrying because, based on figures reported, I predict that the set annual turnover could still be met.

It is not important to worry about the total amount of goods already or still to be exported. What is important is whether the situation will improve next year.

Export turnover of domestic enterprises is reported to have increased by only 4 per cent in the first four months of this year while that of foreign-invested firms reached 36 per cent.

Therefore, the Government should focus on supporting domestic enterprises to boost exports, rather than simply increasing the amount of export goods.

Viet Nam is trying to establish a trade balance, which will probably take more than two years.

The trade deficit during the first four months of this year was reported at only US$176 million, much lower than that of the same period last year. However, it is sad because the figure reflects the stagnation of the economy.

If Viet Nam did not promote the import of machines, equipment and manufacturing materials, production would not be boosted and there would be no goods for export in the coming quarters.

What measures could help enterprises overcome the recession and promote economic development?

Enterprises must be restructured for efficient operation. The Government, besides fiscal policies, should consider reducing input costs for companies.

One of the things to do, I think, is to check the kinds of fees that enterprises pay to better streamline efforts.

High interest rates will not prevent enterprises from borrowing money from banks. However, bad debts hinder accessibility to loans.

What are the roles of the Government in making loans accessible to enterprises?

Making loans accessible to enterprises is very urgent.

Many banks currently have money to loan to firms. However, banks still hesitate to provide loans because they do not want to increase bad debts while existing payments remain outstanding.

This is why the Government should intervene. It could act as guarantee for enterprises to borrow money from banks. — VNS

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