Enterprises are seeking capital to endure difficulties

VCN - Borrowing capital of enterprises at banks is an old story, but new details always arise. Especially in the current difficult market situation, enterprises expect the banking industry to adjust policies to help them solve capital problems and overcome the current market difficulties.
Preliminary processing of fresh coconut for export at Vina T&T Company. Illustration: T.L
Preliminary processing of fresh coconut for export at Vina T&T Company. Illustration: T.L

Major industries are struggling

Mr. Nguyen Ngoc Hoa, Chairman of Ho Chi Minh City Business Association: Need to restore the stimulus program soon

Ho Chi Minh City's investment stimulus program in the previous period had greatly supported enterprises in technological innovation and production efficiency. But for more than 2 years now, this program has been stopped, causing many enterprises that have participated halfway to stop, so it is very difficult. Therefore, Ho Chi Minh City should soon have a solution to restore the stimulus program to support enterprises.

The survey recently conducted by the Ho Chi Minh City Business Association has shown a gloomy picture of the production and business status of enterprises in most of the key economic sectors.

Specifically, the export turnover of the textile and garment industry decreased by over 8% over the same period. Many enterprises have to reduce working hours to maintain and retain employees. Most enterprises are actively restructuring, saving, reducing resources, and cutting spending.

Common difficulties are a lack of cash flow, they cannot access loans, many enterprises are not disbursed, and bad debts are not transferred. Therefore, since mid-2022, textile and garment enterprises have not invested and tended to resell and lose their brands. It is predicted that the coming months will be a difficult period for garment and textile enterprises.

The electromechanical industry also has a general situation of reduced orders, with some enterprises down to 50%; on-the-spot export orders also decreased by 30-40%. Vietnamese mechanical enterprises face fierce competition from FDI enterprises, especially small and medium-sized enterprises, which have to reduce working hours and reduce labour in order to reduce production costs.

The real estate industry froze, enterprises lacked cash flow, affecting the supply chain, lack of money to pay contractors, pay bondholders to pay bank interest, pay wages to employees.

Supply was also affected, while iron prices increased, construction contracts signed continued to lose. Funding is very difficult, almost impossible to access a support package of VND 120,000 billion for interest rates from 1.5%-2%.

Collateral is agricultural land that is very undervalued and the value of the collateral is generally reduced by up to 30%, requiring additional collateral while enterprises are almost exhausted.

The difficulties of the real estate industry have led to the construction material industry currently having about 40% of enterprises in the state of inoperability, it is likely that by the end of 2023, many enterprises will go bankrupt if the situation does not change. Other industries such as food and foodstuffs, industrial construction, fine arts and wood processing, and tourism also face many difficulties.

Need capital, but borrowing is not easy

Speaking at the seminar “Opening up capital flows into production and business” held recently, Mr. Nguyen Ngoc Hoa, Chairman of Ho Chi Minh City Business Association said that the market was difficult, so most enterprises were just trying to endure in the current period with the expectation that the situation would be brighter by the end of the year.

However, the previous loan still generated interest, so enterprises wanted the banks to have a policy of debt freezing and debt rescheduling for them. “The debt freeze and debt rescheduling need to be progressive because if the market gets better in the next year, it will be very difficult for enterprises having just recovered to pay the accumulated debt of 2 years,” Mr. Hoa said.

Besides, according to Ho Chi Minh City Business Association, many enterprises borrowed from banks to invest in machinery, purchase raw materials and have mortgaged all assets with legal ownership. Now, they want to borrow more but no longer have any assets to mortgage, the factories are not accepted as collateral by the banks.

Mr. Pham Van Viet, Vice Chairman of Ho Chi Minh City Garment - Embroidery - Knitting Association, President and General Director of VitaJean also said that the number of raw materials in stock and inventories of textile and garment enterprises was very large.

Besides, in the past, foreign customers all received goods and extended payment for 90-160 days, but due to difficulties, customers now required the company to deposit, making cash flow difficulties, and not meeting the requirements of banks. Mr. Nguyen Van Tri, Director of Lap Phuc Co., Ltd. said that after more than 30 years of development, through many times of borrowing money from banks through the stimulus program of Ho Chi Minh City, Lap Phuc had grown on par with large enterprises. The company's factories, pieces of machinery and equipment were very modern. Mr. Tri believed that bank capital played a very important role in the development of the company. “Lap Phuc is lucky enough to participate in Ho Chi Minh City's stimulus program, which means that the company only pays the capital and interest is paid by the city. It would be very difficult if the company had to pay interest on their own, we cannot make any ready-made products with 20-30% profit,” Mr. Tri shared.

Accordingly, Lap Phuc manufactures high-tech products in the pattern sector for automobile manufacturing and exported them to the US. But the company has to compete with Chinese products, the price must always be low to sell, so the profit margin is very limited.

However, not all enterprises have difficulty accessing bank capital. Mr. Nguyen Dinh Tung, General Director of Vina T&T Company, said that the company had a stable market and the export of fruit was still good, the cash flow was stable, so Vina T&T still enjoyed the bank's incentives. Currently, the company was borrowing capital from BIDV, Vietinbank with an interest rate of about 8-8.5% per year, much lower than many other enterprises. And if it had to borrow at an interest rate of over 10%, Vina T&T would not be able to survive.

However, Mr. Tung also had concerns about the valuation of collateral for loans at banks. Specifically, the investment cost of long-term plants such as jackfruit and durian were quite large, from VND 50-70 million per ha and after only 1-2 years will start harvesting. But for a long time, the bank only conducted valuation for land, fruit trees were not considered assets, making it difficult for farmers to get loans. Currently, enterprises like Vina T&T were investing in farmers and then consuming products for export, but their resources were limited, so the investment was not much.

Similarly, Le Mai Huu Lam, General Director of Cat Van Loi Industrial Electrical Equipment Manufacturing Joint Stock Company, said that the company leased land in the industrial park for a term of 50 years and paid annual rent for about US$ 170 -190 per m2. The company had invested a large amount of money to rent land and build factories, but when borrowing, the bank only determined the price of the factory, not calculated the value of the leased land, so the loan value was very low.

Accordingly, enterprises all want the banking industry to have a solution by valuing collateral under market prices, increasing the guaranteed rate of collateral, allowing mortgage of annual leased land assets, piloting unsecured loans and increasing the value of mortgages with agricultural land. Particularly for the textile and garment industry, in the face of high inventory and difficulties of cash flow, Mr. Viet wanted the banking industry to have a lending policy based on receivables, inventory materials and inventory products. In addition, it is necessary to loosen the lending regulations because in the current conditions, if the regulations remain the same as before, enterprises cannot access them.

By Nguyen Hien/ Binh Minh

Related News

Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there are still difficulties, the economy is gradually returning to a high growth trajectory. In that context, it is necessary to let fiscal policy return to normal state.
State-owned commercial banking sector performs optimistic growth, but more capital in need

State-owned commercial banking sector performs optimistic growth, but more capital in need

VCN - According to the report sent to the National Assembly before the 8th Session of the Government on investment, management and use of state capital in enterprises nationwide in 2023, the business performance of the state-owned commercial banking sector achieved positive growth.
Vietnam

Vietnam's economy is recovering well

VCN - According to Dr. Nguyen Quoc Viet, Deputy Director of the Vietnam Institute for Economic and Policy Research (VEPR), by the end of the third quarter of this year, Vietnam's economy had recovered relatively well amid optimism about the overall growth of the world economy in late 2024 and 2025.
Ba Ria-Vung Tau Customs cultivates a stronger relationship with enterprises

Ba Ria-Vung Tau Customs cultivates a stronger relationship with enterprises

VCN - Ba Ria - Vung Tau Customs Department held a conference to review the development of Customs - Business partnership.

Latest News

Import and export are expected to reach 800 billion USD

Import and export are expected to reach 800 billion USD

VCN - Although the import and export turnover of goods slowed down in September 2024, in general, import and export activities, especially exports, still grew positively in the first 9 months of 2024. It is expected that import and export of goods in 2024 will reach a record of 800 billion USD.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Rice exports likely to set new record in 2024

Rice exports likely to set new record in 2024

Vietnam sold 800,000 tonnes of rice overseas for 505 million USD in October, bringing the country's total export volume and value in the first ten months to nearly 7.8 million tonnes and 4.86 billion USD, up 10.2% and 23.4% year-on-year, respectively.
Vietnamese goods conquer halal market through trust and quality

Vietnamese goods conquer halal market through trust and quality

VCN - According to the Ministry of Agriculture and Rural Development, Vietnam's capacity to export over 50 billion USD worth of agricultural products annually, coupled with established supply chains, provides a significant advantage for Vietnamese agricultural and aquatic products to penetrate the Halal market.

More News

Exporters urged to have strategies to take advantage of UKVFTA for expansion

Exporters urged to have strategies to take advantage of UKVFTA for expansion

The UK is concerned by sustainable development, labour issues, environmental protection and social responsibility. Therefore, when exporting to the UK, enterprises should not just be concerned about being competitive in terms of price and quality.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Vietnam and UAE trade sees billion-dollar growth

Vietnam and UAE trade sees billion-dollar growth

VCN - According to General Department of Vietnam Customs by the end of September 2024, bilateral trade between Vietnam and the United Arab Emirates (UAE) reached nearly US$5 billion, an increase of more than US$1.4 billion over the same period last year.
Sharing responsibility for ensuring security and safety of the supply chain

Sharing responsibility for ensuring security and safety of the supply chain

VCN – Post - clearance audit is carried out in a planned, focused and key manner, avoiding widespread and ineffective inspections, thereby creating convenience for the business community and improving the effectiveness of state management of customs.
Many factors affecting tuna exports in the last months of the year

Many factors affecting tuna exports in the last months of the year

VCN - Tensions between Israel and Iran escalate, tuna businesses are worried, they may have to stop export orders to the Israeli market in the last months of the year.
Vietnam still dominates Philippine rice import

Vietnam still dominates Philippine rice import

Vietnam continues to assert its dominance as the top rice exporter to the Philippines, with 2.91 million tonnes shipped as of the late October, or over 79% of the Philippines' total rice imports, according to the Vietnam Trade Office in the Philippines.
Vietnam cements ties with partners to engage in global semiconductor, AI industries

Vietnam cements ties with partners to engage in global semiconductor, AI industries

By boosting cooperation with reputable partners across the globe, Vietnam is taking steps to gain a foothold in the world’s semiconductor and artificial intelligence (AI) industries.
Aquatic exports expected to rise in year-end despite challenges

Aquatic exports expected to rise in year-end despite challenges

Aquatic exports is expected to surge in the remaining months of this year, as the year-end festive season comes, despite many challenges in the international markets, according to insiders.
Trade Defense: The Key to Success for Vietnamese Businesses

Trade Defense: The Key to Success for Vietnamese Businesses

VCN - From losses and near bankruptcy, many domestic enterprises have recovered thanks to timely application of trade defense measures. Trade defense is also an effective shield for Vietnamese enterprises against a series of lawsuits from importing countries, thereby maintaining advantages and developing on "away grounds".
Read More

Your care

Latest Most read
Import and export are expected to reach 800 billion USD

Import and export are expected to reach 800 billion USD

VCN - At the regular Government meeting in September 2024, Minister of Industry and Trade Nguyen Hong Dien assessed: import and export continued to be a bright spot, recording a positive recovery compared to the same period last year.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Rice exports likely to set new record in 2024

Rice exports likely to set new record in 2024

Vietnam sold 800,000 tonnes of rice overseas for 505 million USD in October, bringing the country's total export volume and value in the first ten months to nearly 7.8 million tonnes and 4.86 billion USD, up 10.2% and 23.4% year-on-year, respectively.
Vietnamese goods conquer halal market through trust and quality

Vietnamese goods conquer halal market through trust and quality

According to the Ministry of Agriculture and Rural Development, Vietnamese agricultural and aquatic products could penetrate the Halal market.
Exporters urged to have strategies to take advantage of UKVFTA for expansion

Exporters urged to have strategies to take advantage of UKVFTA for expansion

The UK is concerned by sustainable development, labour issues, environmental protection and social responsibility. Therefore, when exporting to the UK, enterprises should not just be concerned about being competitive in terms of price and quality.
Mobile Version