Dec 2, 2012

Vietnam - Businesses complain they don’t receive proper care from the State

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VietNamNet Bridge – Businesses have been caught into a vicious circle. Since they cannot borrow money, their production has become stagnant and they cannot pay bank debts. And since they cannot pay debts, they cannot access bank loans.

The reports by provincial authorities show that businesses still cannot see the “light at the end of the tunnel.”

Trinh Huu Thang, Deputy Director of the Bac Giang provincial Planning and Investment Department, said 97 percent of businesses in the province are small and medium ones, which have modest capital and have no assets to mortgage for loans. Therefore, they cannot access loans from banks, which always set strict requirements and want collaterals.

A senior official from the Nghe An provincial Planning and Investment Department noted that banks nowadays operate like pawn shops, because they only provide loans if businesses have collaterals.

In principle, banks should be seen as the “investors of the investors”, i.e. they need to provide loans after considering the feasibility of the projects, not the mortgaged assets of the borrowers. However, banks still do not have such a capability.

Since banks still have been insisting on collaterals, no improvement has been made in the relation between bankers and businesses, though a lot of meetings have been gathered to discuss the way out to the current difficulties.

Regarding the tax policies, the State just aims to collect all possible taxes from enterprises, while it does not think of raising the sources of revenue.

“I agree that it is necessary to tax high to restrict garbage. But why don’t we impose high tax on packs only, and low tax on the products?” he questioned.

A participant at the meeting of the representatives from the Ministry of Planning and Investment, relevant ministries and local authorities frankly said that the State has not paid proper attention to rescuing businesses.

In Nghe An province, 40 percent of businesses have paralyzed, 30 percent have been maintaining production at a moderate level. The most suffered enterprises are the ones operating in the fields of construction material, installation and construction.

The situation is also bad even in the province of Vinh Phuc, which is considered the “metropolis” of the manufacturing and assembling industry.

Dai Van Gioi, Deputy Director of the Vinh Phuc provincial Planning and Investment, said though the local authorities have been trying every possible means to rescue businesses, 41 percent of its businesses had stopped operation by the end of June 2012.

Gioi said that once enterprises incur losses, they don’t pay tax, and the local budget has become... empty. Therefore, the provincial authorities have anticipated that it would not be able to fulfill the plan on tax collection.

Agreeing with Gioi, Lam Nguyen Khoi, Deputy Director of the HCM City Planning and Investment said once businesses meet difficulties, the local budget has lost big sources of revenue.

Khoi said the businesses in the city have suffered from the overly high bank loan interest rates and increasingly high inventories. Products have been left unsold, because the main export markets have cut their orders.

Economists all believe that it’s necessary to rescue the real estate market right now, because a big amount of capital has been “buried” in the market. However, the measures taken to save the market have not brought the desired effects.

“If the real estate market breaks down, this would cause immeasurable consequences,” said an official from the Hanoi Planning and Investment.

He also said that the government’s Resolution No. 13 on helping businesses overcome difficulties, kicked off in May, has not brought considerable effects.


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