According to The Star article published on April 20, 2023, nearly 43,000 businesses temporarily shut during the first quarter of 2023 – an increase of 20.1% compared with the same period last year, and 12,800 closed down permanently, according to a report by the General Statistics office.
Pham Dinh Doan, chairman of Phu Thai Group, said businesses would likely face greater challenges in the near future as the market had been experiencing lower demand for consumption on top of rising input costs and difficulty in securing capital. A survey by the HCM City Business Association showed 83, out of 100 businesses, are currently struggling to stay afloat.
Of these, 43 said they had problems with high-interest rates, 40 with difficulty in accessing capital sources, and 38 with the complexity of procedures to apply for loans.
The association urged the central bank to take measures to address these issues, namely, lowering interest rates to around 8% to 8.5% annually and streamlining loan procedures.
Another survey by the Vietnam Chamber of Commerce and Industry indicated access to credit had become a major problem among the business community with 55.6%, out of 12,000 businesses that participated saying credit was the biggest concern, steadily increasing from 34.8% in 2019, 40.7% in 2020 and 46.9% in 2021.
On the government’s 2% interest support package, most businesses said it remained extremely difficult to meet the lending conditions set by banks, especially for small and medium enterprises (SMEs) .
Tran Thi Hong Minh, head of the Institute of Central Economic Management Research under the Ministry of Planning and Investment, said while demand was great the number of businesses able to access the support package remained low, particularly among cooperatives and household businesses.She said post-loan inspection was a major concern among businesses, as well as meeting the loan conditions, which had been said to be unclear by many.
“The government must step up efforts in the implementation of support programmes as they are vital to the country’s ability to maintain and strengthen macroeconomic stability, keep inflation in check and stabilise the foreign exchange market,” Minh said.
Nguyen Quoc Hiep, chairman of the Vietnam Construction Contractors Association, said liquidity had been a problem in his industry as developers found themselves unable to make sales, putting them at risk of mounting debt and bankruptcy.
In addition, contractors would likely get hit the hardest.
“Vietnamese contractors are small in size. In the construction industry, they must spend money first and get paid later,” he said.“As developers are unable to pay, the contractor is in financial woe (having no money to pay for materials and labour while having to pay back bank loans). Contractors have to try to bid at all costs to save their businesses in the short term, but the more they do, the more they lose, and the closer they are to bankruptcy.”
Mac Quoc Anh, secretary-general of the Hanoi Small and Medium Enterprises Association, said borrowing from credit institutions remained an important channel for SMEs and urged the government to soon put out a guideline for the institutions in credit evaluation for the SMEs.
In a recent interview, Minister of Planning and Investment Nguyen Chi Dung said there was an urgent need to speed up the government’s plans for exempting, reducing, extending, postponing, and deferring taxes, fees, charges, and land use fees applied to 2023.
