"Thirst" for capital in the middle of the price vortex

VCN - From the beginning of the year until now, the price of many kinds of goods and raw materials for input production has increased, causing the operating costs of enterprises to be increased, and a difficult "problem" of capital for re-production becomes more and more difficult.
The high cost of raw materials and logistics has affected the profit margins of many textile and garment enterprises. Illustration: H.Diu
The high cost of raw materials and logistics has affected the profit margins of many textile and garment enterprises. Illustration: H.Diu

Trying to maintain production

As reflected by textile enterprises, in the first five months of 2022, the average price of imported yarn increased by 10% over the same period last year, due to the increase in cotton and oil prices, along with high anchoring logistics costs. This leads to an increase in fabric costs, which significantly affects the gross profit margin of domestic manufacturing companies - especially those that have the majority of FOB orders (manufacturing orders in the form of purchasing raw materials - semi-finished products).

Similarly, with wood industry enterprises, tensions between Russia and Western countries have led Russia to issue a ban on exporting logs to European countries and the US, leading to a shortage of raw wood supplies globally, leading to an increase in the price of raw materials. According to Trading Economics, the price of American lumber has increased by 25% compared to the beginning of the year, leading to a decrease in the value of imported wood materials in Vietnam compared to the previous year. Experts at VnDirect Securities Company forecast that the gross profit margin of domestic wood and furniture companies will continue to decrease by 0.4-0.6 percentage points over the same period in 2022, due to input materials. input and increased logistics costs.

Also on this issue, according to Ly Kim Chi, Chairman of Ho Chi Minh City Food and Food Association, the price of input materials for production is increasing, with some items increasing by more than 40%, along with high gasoline prices. The record makes it difficult for businesses not only in terms of supply but also in terms of capital to buy raw materials, as well as to pay production costs. Ly Kim Chi for example, if before, businesses only needed about VND100 billion to stockpile raw materials, now the cost increases, pushing the reserve money by 50%, which means VND150 billion is needed. Therefore, businesses are in dire need of more capital for production, because if businesses apply the price, it will certainly push up the selling price of products, leading to pressure on inflation.

"Food and food businesses are facing many difficulties, must use other capital mobilization channels to maintain production up to this point," Ms. Chi emphasized.

In fact, food and food are essential commodities. If the price increases, it will affect purchasing power and affect inflation. Therefore, many businesses said that in the past time, the food and food industry maintained the price level, implemented stabilization programs, and prevented inflation from rising. Although the food and food industry is enjoying preferential interest rates, according to businesses, it is not possible to fully offset the increasing costs.

A representative of the transport-tourism industry said that as the business's capital source is mainly from shareholder loans or prepaid tour customers, the business has no collateral, so it has to borrow money. Unsecured loans with interest rates of up to 13-14%/month, this interest rate is only enough for businesses to hold on, to ensure sufficient vehicles and employees' salaries, so it is difficult to ensure profits in the current context.

On the other hand, another problem today is the fact that banks with money cannot lend to businesses because they are "stuck" in the credit growth limit (room). Therefore, many banks are "waiting" for the State Bank of Vietnam (SBV) to soon extend the credit room so that banks have more room to disburse credit packages, including preferential credit.

Need to clear the bottleneck on capital

SBV has issued a circular guiding the 2% interest rate support from the state budget according to Decree 31 of the Government. Therefore, many banks have started to implement this support package and have been approved by the SBV to provide credit support for businesses, cooperatives and business households. Specifically, Agribank announced that it has approved the interest rate support limit of 2%/year with an expected size of VND2,500 billion in 2022 for those eligible for interest rate support. ABBank approved VND264 billion to support interest rate reduction. Correspondingly, there will be about VND13,000 billion of outstanding loans that will be preferential. With VietinBank, about 30% of the total credit size of banks in the group can be reduced interest rates according to Decree 31. Therefore, this bank is set aside VND7,000 billion to support interest rate reductions this year and next year.

However, access to capital is still a big problem for businesses. A representative of Tan Quang Minh Production and Trading Co., Ltd. said that accessing this capital is very difficult, even with the 2% loan interest rate support program, businesses do not know how to continue. reachable.

At the recent question-and-answer session at the National Assembly, Governor Nguyen Thi Hong said that small and medium-sized enterprises account for 97% of the total number of businesses in the economy. This group of businesses has many limited conditions such as finance, management ability, and brand name, so the credit rating is not high. Credit institutions must assess their credit in order to offer an appropriate interest rate, the interest rate for low credit enterprises must be higher than that of high credit enterprises. Businesses with many limitations will not be eligible to borrow capital from banks, because credit institutions must follow the principle of borrowing capital, and customers must ensure the ability to repay, because the loan is also mobilization of the people.

Facing current difficulties, businesses still need more specific and preferential policies to increase access to capital. Ly Kim Chi suggested that commercial banks have the policy to re-evaluate the value of collateral to increase the disbursement limit, helping businesses have more capital, especially those that do well. A representative of a food production enterprise said that businesses need to get long-term loans, banks to increase lending levels and implement policies faster so that businesses can have more capital for production and business.

Along with that, banks are also "eagerly" proposing the SBV to increase the credit room or maybe have policies to support banks, excluding loans under the 2% interest rate support program from the credit room calculation. Mr. Nguyen Quoc Hung, General Secretary of the Bankers Association, said that the capital needs and growth of credit room of banks are very large. Therefore, it is necessary to balance the inflation level to provide a reasonable credit growth threshold, otherwise it will be difficult for banks when conditions are sufficient but cannot disburse due to the lack of room.

By Binh Nam/Huu Tuc

Related News

Efforts to remove obstacles to upgrade the stock market

Efforts to remove obstacles to upgrade the stock market

VCN - According to the sharing of Ms. Vu Thi Chan Phuong, Chairwoman of the State Securities Commission (SSC), in addition to completing the main criteria of international rating organizations in upgrading the stock market (TTCK), the State Securities Commission (SSC) continues to improve domestic regulations on the basis of researching international regulations and practices to promote Vietnam's stock market to develop in a sustainable direction, creating a favorable environment to attract international investors and foreign indirect investment capital flows.
"Closing" 2023, public investment disbursement reached 93.12% of the assigned plan

"Closing" 2023, public investment disbursement reached 93.12% of the assigned plan

VCN - According to a report from the Ministry of Finance, the estimated payment for public investment capital of the whole country by the end of January 31, 2024 (the deadline for disbursement of the 2023 capital plan) reached 82.47% of the year plan and reached 93.12% of the plan assigned by the Prime Minister.
Proposing for state-owned enterprises to divest capital from loss-making enterprises

Proposing for state-owned enterprises to divest capital from loss-making enterprises

VCN - The Ministry of Finance is proposing to amend regulations on removing obstacles for enterprises in which the State holds more than 50% of charter capital in the direction of building a legal basis for these enterprises to divest capital from other enterprises suffer losses or have accumulated losses.
Prevent risks from securities companies mobilizing capital from investors

Prevent risks from securities companies mobilizing capital from investors

VCN - The State Securities Commission (SSC) issued an official dispatch requesting securities companies to immediately stop signing new agreements and to settle all transactions related to investment cooperation activities, no later than June 30, 2024. Securities companies must report the settlement implementation roadmap to the SSC before December 30, 2024, and monthly report the results of implementation until full settlement. Mr. Do Bao Ngoc, Deputy General Director of Vietnam Construction Securities Joint Stock Company (CSI), discussed with Customs Magazine about this issue.

Latest News

Tax sector implements solutions on revenue management to achieve “dual goals”

Tax sector implements solutions on revenue management to achieve “dual goals”

VCN – Sharing direction of ta management in 2024, Mr. Mai Son, Deputy Director General of Taxation said that the Tax sector has implemented solutions to achieve “dual goals” of completing the revenue target while supporting enterprises in operation and economic growth.
Securities attractive investment channel

Securities attractive investment channel

VCN - According to experts, with recent developments in the stock market, it can be seen that securities are currently an attractive investment channel.
Public investment - Expectations from key transportation projects

Public investment - Expectations from key transportation projects

VCN - As one of the three main growth engines of the economy, in recent times, public investment has played an important role, leading and activating all social resources for development investment. This important driving force continues to have very positive signals with disbursement results reaching 2.58%, higher than the same period. 2024 strives to achieve a disbursement rate of at least 95%.
More policy rate cuts forecast in 2024 to support economic growth

More policy rate cuts forecast in 2024 to support economic growth

There is still room for the State Bank of Vietnam (SBV) to make another policy interest rate cut in 2024 to boost economic growth, analysts believed.

More News

Urgently complete Decree on application of Global Minimum Tax inline with roadmap

Urgently complete Decree on application of Global Minimum Tax inline with roadmap

VCN – Regarding the development of Decree on the application of Additional corporate income tax (Global Minimum Tax), Deputy Director General of the General Department of Taxation Dang Ngoc Minh has requested units developing the Decree to closely cooperate and give opinion in line with actual operations of corporations that are affected by Resolution 107/2023/QH15 to effectively facilitate taxpayers during the implementation of the Decree.
Strengthen the applications of coercive measures to collect tax debt

Strengthen the applications of coercive measures to collect tax debt

VCN - The General Department of Taxation requests tax departments to fully implement measures to urge, enforce and disclose information under the provisions of the Law on Tax Administration to recover tax debt.
PM orders SOEs to improve production, business efficiency

PM orders SOEs to improve production, business efficiency

Prime Minister Phạm Minh Chính has requested State-owned enterprises (SOEs) to reform governance, improve production and business efficiency, and strongly promote development investment.
Vietnam acts to combat money laundering, terrorist financing

Vietnam acts to combat money laundering, terrorist financing

Deputy Prime Minister Le Minh Khai on February 23 signed a decision promulgating the national action plan to implement the Government's commitment to prevent and combat money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction.
Banks ask central bank to extend June 30 payment deadline

Banks ask central bank to extend June 30 payment deadline

Industry experts said the current challenging economic situation and difficulties faced by businesses severely affect their ability to meet debt obligations. As there are no shortcuts to resolving old bad debts, a significant number of newly classified bad debts, which should be expected on June 30 this year, will put tremendous pressure on the country’s financial sector, as well as businesses.
The State Treasury implements nine key tasks in 2024

The State Treasury implements nine key tasks in 2024

VCN - The deployment of key tasks plan in 2024 (refer to the Plan) of State Treasury was issued to focus resources on completing tasks during the year and following the proposed strategies.
SBV injects large amount of money to support capital for banks

SBV injects large amount of money to support capital for banks

The State Bank of Vietnam (SBV) on February 20 net injected more than 5 trillion VND (nearly 204 million USD) into the banking system through the open market operation (OMO) channel to support capital for commercial banks.
Vietnam Stock Exchange’s revenue down nearly 44% in 2023

Vietnam Stock Exchange’s revenue down nearly 44% in 2023

The Vietnam Stock Exchange (VNX) reported revenue of over 1.92 trillion VND (78.26 million USD) in 2023, down nearly 44% compared to the previous year.
Focusing on five tasks so that the securities industry continues to develop in the face of intertwined opportunities, challenges

Focusing on five tasks so that the securities industry continues to develop in the face of intertwined opportunities, challenges

VCN - Deputy Minister of Finance Nguyen Duc Chi raised five tasks that need to be focused in 2024 so that the securities industry continues to develop in the face of intertwined opportunities and challenges.
Read More

Your care

Latest Most read
Tax sector implements solutions on revenue management to achieve “dual goals”

Tax sector implements solutions on revenue management to achieve “dual goals”

VCN - 2023 is the year that the domestic economy faces many difficulties and challenges and is negatively impacted by the world economy, causing great pressure in the revenue collection of the Tax sector.
Securities attractive investment channel

Securities attractive investment channel

VCN - According to experts, with recent developments in the stock market, it can be seen that securities are currently an attractive investment channel.
Public investment - Expectations from key transportation projects

Public investment - Expectations from key transportation projects

VCN - For 12 component projects in the 2021-2025 period, although the first implementation years still had many problems for land and construction materials, investors and contractors had made efforts to organize construction and closely follow progress p
More policy rate cuts forecast in 2024 to support economic growth

More policy rate cuts forecast in 2024 to support economic growth

There is still room for the State Bank of Vietnam (SBV) to make another policy interest rate cut in 2024 to boost economic growth, analysts believed.
Urgently complete Decree on application of Global Minimum Tax inline with roadmap

Urgently complete Decree on application of Global Minimum Tax inline with roadmap

VCN - On November 29, 2023, the National Assembly approved Resolution No. 107/2023/QH15 on the application of additional corporate income tax under Global Anti-Base Erosion Rules. The Resolution takes effect from January 1, 2024, and is applied from fisca
Mobile Version