Vietnam’s Businesses Still Need More Support

Generally, the overall economy in 2014 has a remarkable upward trend in comparison with the gloomy economic situation in 2013. Specifically, real estate market situation has a positive signal as a huge amount of outstanding capital is pumped into. As for interbank financial market, the Government and Central Bank has implemented many strong measures to increase liquidity and adjust capital flows such as require banks to report periodically to the central bank or carry out cross-checking mode. The Government has also made its best effort to rescue the business community. Particularly, real estate market has received the credit package of VND30 trillion, will be supported by another package of VND50 trillion to break the ice of this market.

 

According to Dr Cao Sy Kiem, in Vietnam, SMEs makes up for the major proportion in all kinds of businesses. Thus, SMEs play a very important role in creating jobs and increasing incomes for workers, helping to mobilise social resources for development investment, reduce poverty, etc. In particular, SMEs annually create more than half a million jobs; use up to 51 percent of the workforce and contribute more than 40 percent of GDP. Despite the great contribution to the national economy, most business owners complained that they had few rights or even suffered from discrimination in favour of some state-owned enterprises.

 

For example, businesses of this group have faced many difficulties accessing policies or incentive programmes of the Government. Accordingly, only an inconsiderable percentage (below 10 percent) of SMEs involved in the government support programmes such as National Trade Promotion Programme or Science and Technology Innovation Fund. Another support channel is the access to capital loans in the form of loan guarantees and credit support. However, in reality, just a few small businesses benefit from this support policy. Fifty percent of the businesses have trouble with collateral requirements; eighty percent of them have to encounter barriers with inappropriate interest rate. In addition, legal remedies for capital loans are, currently, not suitable for SMEs, said Mr Cao Si Kiem.

According to the analysis and evaluation of Dr Le Dang Doanh, Vietnam’s business environment in 2014 still face many difficulties, so that right from early years, businesses started setting up business plans cautiously. This situation resulted from the tough economy and the decrease in people’s demands. Statistics in the first quarter of 2014 pointed out that while industry output rose to 4.69 percent, the inventory increased to 13.4 percent. Therefore, the fact that companies set low growth goals completely makes sense.

Mr Le Dang Doanh also forecast that with such current business environment; only a few economic sectors will have good development opportunities, for instance, exporters or those meeting natural demands of people such as education, healthcare and those operating in the fields of environment, food safety. Besides, businesses involved in real estate domain will continue to experience difficulties. This is reflected in a huge quantity of inventory of items such as cement, steel, etc.

Another issue that has a major impact on the business environment is sanctions and regulations. Currently, the Ministry of Planning and Investment is one of the agencies that are urgently enacting many sanctions in order to create a legal framework to improve the investment climate and business of enterprises. Specifically, the Ministry is planning to propose the National Assembly and the Government the amended Investment Law and Enterprise Law to put laws into practice, creating a good business environment and supporting manufacturing business.