Nov 24, 2012

Vietnam - Economic crisis hits 60% of SMEs

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HANOI – Most small and medium-sized enterprises (SMEs) in Vietnam have become vulnerable under the impact of the global economic crisis, says a report announced by the Central Institute for Economic Management on Wednesday.

The report named “Characteristics of the Vietnamese business environment – Evidence from a small and medium enterprise survey in 2011” is based on a survey of some 2,500 SMEs in ten cities and provinces nationwide, including Hanoi, HCMC and Haiphong.

As much as 60% of the surveyed enterprises said they had suffered the negative impact of worsening business environment because of the global economic crisis in 2011. This percentage is much higher than 17% in 2009.

About 71% of SMEs in the southern region said they had run into more problems last year.

The survey shows that 39% of SMEs faced difficult access to credit capital. Nearly 90% of the respondents had to borrow loans from unofficial sources given the problems in the official credit market.

The report says unofficial loan was of small value, accounting for around 9% of the total investment, but it was a regular component in financial plans of SMEs.

Pham Thi Thu Hang from the Vietnam Chamber of Commerce and Industry (VCCI) said: “This indicates credit demand of businesses is very high and barriers against credit access have not been removed.”

The report notes the percentage of enterprises improving their products tended to fall. In the current context, when the main market of local enterprises is the home market and smuggled goods remains a headache, it is very essential that they improve their products in order to conquer the local market and the niche market.

“If this trend continued, SMEs would soon have to leave the market. In fact, in the early months of the year, the problem of inventory forced more than 42,000 enterprises to halt operations and disband,” Hang warned.

Meanwhile, John Rand from the University of Copenhagen of Denmark, conductor of the survey, suggested the State should pay more attention to micro-enterprises, saying that they are the main force for job creation and poverty reduction in Vietnam.

Tu Hoang - The Saigon Times Daily

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