Businesses need financial support to recover
Enterprises need financial support to recover and develop. Photo: Ngoc Hien |
The company lacks working capital
The Private Economic Development Research Board (Board IV of the Prime Minister's Advisory Council for Administrative Procedure Reform) has just sent a report to the Prime Minister reflecting a number of difficulties and challenges of the business community in the recovery process after the Covid-19 pandemic.
Through the exchange, discussion and quick grasp of the situation from 16 organizations and associations in the first half of August, Board IV said that businesses expressed absolute confidence in the management of business policies and the Government's recent macro-economic situation, especially the spirit of the Government directing all levels and sectors "to grasp the situation and forecast developments closely" in order to "react quickly", in which, monetary policy implementation must be done "daily and hourly".
As a result, up to this point, Vietnam has basically ensured macroeconomic stability, controlled inflation, promoted growth, and ensured major balances.
However, according to Board IV, in that context, the business community, including newly established enterprises and businesses that have just returned to operation in the first six months of the year, as well as businesses that have persevered in fighting, trying to maintain operations, still need financial support to be able to maintain operations and recover.
Reflections from organizations and associations show that most businesses are still facing huge financial difficulties for many reasons.
Typically, businesses lack working capital, as a result of more than two years of the pandemic, there is no or little revenue, but they still have to pay debts, bank loans and other amounts to maintain and other expenses to maintain and operate the business to a minimum.
Besides, input costs for production increased, while the quantity and profit of output orders decreased. The tightening of global financial conditions combined with supply chain disruptions reduces the growth prospects of the global economy, leading to much lower demand for Vietnamese exports in most markets.
Businesses also reflect difficulties in accessing loans. Most businesses, especially small and medium enterprises, are facing this issue. A number of factors are reflected by the associations because the size of enterprises is mostly small and medium, so the collateral assets of the enterprises are low, meaning banks often do not give priority to these enterprises.
The "self" cash flow of businesses is also small and unstable, making businesses unable to meet the conditions when they want to access supportive loans, preferential loans, medium and long-term loans.
Even for businesses that are not troubled by the above two factors, in the current context, when the State Bank tightly controls credit growth targets, commercial banks do not have credit room to loan to businesses.
Proposal to speed up economic support packages
According to Board IV, in fact, small and medium enterprises and business households account for 95% of the total number of operating enterprises in Vietnam. If the credit lending problem is not resolved, these businesses and business households will be at risk of bankruptcy.
Explaining the reason, Board IV said that, firstly, there is no money to pay wages to employees and accordingly, enterprises will lose human resources. The second is that there is no capital for new business and investment, and it is impossible to overcome the consequences after the pandemic.
Small and medium enterprises play the role of satellite businesses, supporting large enterprises and corporations in the process of implementing key projects of the country. Therefore, it is necessary at this time to have measures to control the inflation rate appropriately to loosen the credit room to support the above-mentioned businesses and business households.
Otherwise, there will be a scenario next year that these businesses will go bankrupt and cannot survive, leading to an economic recession. That is more dangerous than inflation.
From the above difficulties, Board IV and business associations proposed the Prime Minister direct relevant ministries and branches to consider a number of solutions.
In particular, to solve financial difficulties for businesses, it is proposed that the Government continue to maintain policies to support businesses in tax, fees and credit, assigning the Ministry of Finance to continue reviewing and expanding support to reduce the cost burden of businesses during the recovery process.
At the same time, speed up economic support packages including an additional interest rate compensation package of VND40 trillion, disbursing an infrastructure development investment package worth VND113,050 billion to create better conditions for economic recovery.
In addition, Board IV proposed the State Bank study a plan to raise the "ceiling" of credit growth for commercial banks in order to give priority to promoting the production and service sectors, especially in key business areas such as tourism, industry, import and export, agriculture, forestry and fishery; besides the goal of carefully controlling credit flows into high-risk fields such as real estate and securities.
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