Vietnam Economy in 2013: Still Challenging

In the manufacturing and trading sectors, the year 2012 meant “failure”. With 47,000 enterprises wiped out, the figure is increasing day by day and concerns not only small and medium sized enterprises (SMEs), but also large scale enterprises, and even multi-national corporations in Vietnam are threatened with the risk of bankruptcy.

 

Although since 2009, the State Bank of Vietnam (SBV) has gradually loosened credit policy, access to credit for businesses is still tight. In fact, although 95 percent of enterprises are looking for loans, nearly 90 percent of them cannot qualify for official loans and have to get unofficial ones.

 

Lending conditions are still too strict, therefore, although lending interest rate has decreased, enterprises are still facing many difficulties and troubles when accessing loans. This is the very reason why enterprises are under difficult conditions. Only strong enterprises have opportunities to approach credit sources, but the number of them is still very modest.

 

To prevent enterprise bankruptcy, especially aiming to save the economy in last days of 2012 and in 2013, the SBV tends to reduce 1 percent of interest rate. However, according to economic experts, it is crucial to find a way out for products and restore the confidence of enterprises.

 

Until now, instead of investing in technology and management, enterprises focus only on short - term investments, meanwhile the enterprise environment in Vietnam is still not transparent, fair, the “ask - give” mechanism remains popular. The environment is not suitable for true enterprises, and does not encourage them to invest in technology and management. Therefore, when the economy faces strong volatility, enterprises will inevitably have trouble.

 

Currently, enterprises are under pressure to restructure and improve competitiveness. Besides SME supporting programmes, it is necessary to have programmes supporting large scale enterprises to improve management capacity, especially strategic and financial management, focusing on core sectors, constructing modern management standards, well conducting measures of reducing production costs, constructing and well performing mechanism of controlling risks in enterprises. Typically, SMEs with foreign capital have been relatively successful because they pay attention to risk management, training core business human resources, diversifying markets, and most importantly, these enterprises have invested in the right direction and have good resistance, surviving and even expanding business activities.

 

Mr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI) said that the recent economic reform requires aggressive innovation in terms of political institutions and investment environment improvement. The core confidence for enterprises currently is stabilising the market-led macro-economy, improving reform in state owned enterprise sector. In the current difficult situation, Vietnam needs to quickly resolve bad debts and inventories, conduct tax exemption and extension to help enterprises overcome difficulties. The support has to focus on potential enterprises with long - term development strategies, not simply spreading support to all businesses.