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Production stagnate, businesses cry for help, policy makers puzzled   2011-08-29 - TBKTVN

3000 businesses reportedly stopped operation in the first six months of the year, according to the Vietnam Chamber of Commerce and Industry (VCCI). A recent survey on 400 businesses shows that most of the financial reports predict losses, instead of profits, for 2011.

Nguyen Danh Trong, Deputy Director of the Monetary Policy Department under the State Bank of Vietnam: “It’s not easy to push up credit”

The interest rates tend to decrease, while the banks’ liquidity has been stable for the last several months. These are the initial achievements of the implementation of the Resolution No 11 on curbing inflation.

However, there are still big challenges ahead for the monetary policy regulation in the remaining months of the year. By the end of July, the credit growth rate had reached 7.6 percent only, much lower than the ceiling level of 20 percent. The credit growth rate should be at 17-19 percent in order to ensure to provide sufficient capital for the production and business and help foster the economic growth. However, the problem is that while there is still much room to push up credit. Banks do not have much time more to do this.

We have found big gaps in the credit growth rates of different banks. The five state owned banks, which hold 55 percent of the market share, all have reported low credit growth rates. Agribank, the biggest bank in the system, for example, has reported the growth rate of minus 0.35 percent, BIDV two percent. Meanwhile, the highest growth rate of 11 percent was made by Vietcombank.

The reasons behind this have not been found: is it because banks lack capital to lend, or the production cannot “absorb” the capital?

While state owned banks cannot push up credit, joint stock banks and foreign banks all have obtained the ceiling credit growth rate of 20 percent.

Pham Thu Hang, Secretary General of VCCI: “businesses dying gradually, not immediately”

VCCI’s surveys have found out that in the last seven months, the majority of enterprises have been working at moderate level. They say: “it would be better to ‘die gradually’, not immediately”, and that they still need to struggle to survive.

The 400 surveyed businesses, 70 percent of which were big ones, said that the policies prove to be unreasonable, which have burdened enterprises. For example, the prices of petroleum products and electricity increased at the same time. Meanwhile, the minimum wage has increased since May 1, and it is expected to increase further in the time to come. As a result, the enterprises’ expenses on workers’ salaries have increased by 40 percent.

In Hanoi, 35 strike cases were reported in the first six months of 2011.

Responding to the complaints by businesses, the State decided to offer corporate income tax reduction. However, this seems to be not the thing enterprises wants. The tax reduction does not have much significance for businesses, because they cannot make profits to enjoy the tax reductions.

Duong Tri Dung, Chair of Vinalines: “We can survive if the interest rates drop to 10 percent per annum”

If Vietnam continues tightening the monetary policies and does not apply reasonable policies, businesses will die. The lending interest rates should be lowered to 13 percent on average, while our enterprise needs the interest rate of 10 percent to be able to survive.

In the current difficult conditions, tax policies should be designed in a way to help enterprises. It is unreasonable for tax bodies to impose tax on our fleet which only operates in foreign markets and has no relation with the domestic market. This kind of tax is not applied in any other countries in the world.

Tran Quang Nghi, General Director of the Vietnam Textile and Garment Group (Vinatex): “We want to borrow money, but where to find lenders?”

The currently applied tightened monetary policies has reminded me of the movement in the past on calling for man sterilization: all the men, no matter they were old or young, have or don’t have children, were encouraged to go sterilized. Meanwhile, there should always be exclusions, while policies should be different for different subjects.

We dare not expect to see the dong interest rates to go down. We accept to borrow in dollars. But where can we borrow money?

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