President of Vietnam Young Entrepreneurs’ Association Mai Huu Tin thinks that current businesses are much more difficult than that of people’s imagination and the biggest reason is that the demand power of the economy is so low.
Being a member of Parliament as well as in the role of a businessman, he shares with VnExpress in the margin of the session on May 21st about the worry of businesses in the current situation.
- Experts and members of Parliament think that businesses are exhausted. How do businesses think about themselves, sir?
In reality the majority of businesses died, just waiting to be beried. I am in Binh Duong, the situation of Binh Duong entrepreneurs are a little better than that of other regions. But when going to visit Organizations, Young Entrepreneurs’ Associations in localities and big cities such as Hai Phong, Ha Noi, HCMC, Can Tho, etc I see that their difficulties are greater than that of people’s thought. More than 50% young entrepreneurs don’t believe that they can survive throughout this period.
- In your opinion, what are the biggest difficulties of businesses nowadays?
I think they are the market and the demand power. We don’t discuss deeply about realty, people can see so clearly already. But right in other fields the production currently faces so many difficulties because the demand power of the market is so low. Products after being produced can’t sell but if letting it in inventory then businesses will also die. Therefore the situation of trading & production’s standstill is happening everywhere.
- In your opinion, beside solutions that have been showed by Government, what do businesses need more to get over this current difficulties?
What Government has showed I believe they all are true. Restructuring programs are so true but I have a feeling that the way we are implementing is so low. Really need to speed up those solutions. The implementation should go into reality faster than what we are doing.
- Looking at reality, can you guess when the difficulties will pass?
Actually I have no optimistic forecast for the future, because the situation will be continuously bad.
- So what is the best solution for businesses that are facing difficulties now? Close doors to wait for chances, trading perfunctorily, or accepting risks to continuously invest to grasp great chances?
In my opinion, this is not the good time for difficult businesses to invest. They also should not jump into any new business lines but should try to keep their core activities. I believe Government has also known what is necessary to do for businesses, the will to rise and to get over difficulties of businesses is so important.
The more it’s hard, the more we strive to spend time to find chances in our fields, to find other solutions to get over this difficult period. Certainly it will not be difficult forever, it will be better one day. As I’ve said, I can’t determine how long this hard situation lasts is good. Businesses firstly have to save themselves but don’t try to wait for any other solutions.
So many people have recognized their present problem of being operating in so many busines lines, so many fields, spending their power in so many places, etc. That is not a good idea. I think through this period people can recognize that the future is not for businesses that operate too large, so many business lines but should focus on the strongest field, having strong point, and when deciding to invest they should strive so hard in the business that they are doing, should not do easily like they used to do before.
- Many members of Parliament judge that the belief of Vietnamese businesses has been down a lot, they are so tired now. What can make their belief get back?
I don’t want to discuss about the story of belief now. In this hard period businesses firstly have to believe in themselves, no-one can save them but themselves. The more it’s hard, the more we try to think about ways to survive. The success in this case requires the will of each business and not putting the belief in any other places.
Parliament is discussing about correcting some clauses in the Law of Business Income Tax but this matter is more for the future. Firstly other taxes effect daily to the operation of thousands of businesses speciafically VAT (vualue-added tax). But with businesses now the problem is not because of taxes anymore but it is the demand power of the market. That is a big problem.
Ms Nguyen Thi Hong, Head of the Department of Policy and Monetary, Governmental Bank: “According to the latest survey announced by Vietnam Chamber of Commerce and Industry (VCCI), more than 70% businesses express that their current difficulties are not the problem of interest rates or not being able to approach capital from banks anymore, but that is the market, the output for products. Interest rates have been reduced from 2-4% per year since the beginning of this year, the average rate for loaning in prior fields is now 8-10%, more than 60% current loans having interest rates under 15%. Credit can’t increase more but the reasons mostly from our survey are in the low ability of absorbability of the economy. Good businesses don’t want to loan because of the high rate of inventory, consuming products weakly, not wanting to enlarge production and commerce. While businesses that need capital are having weak financial ability. The lesson about loaning under American standards is still there, banks can’t reduce conditions to try to push credit out. To support credit, people should increase the absorbability ability of the economy by solutions of supporting the market, liberating inventory products because the effort of only banks is not enough.”
Mr Dao Van Hung, Director of Policy and Development Institute (Ministry of Planning and Investment): “The average interest rate has got back to that of the period of 2005-2007 and with the current economy I think it is quite sensible. The most worried problem is that the total demand of the economy is very low, social investment is also strongly reduced. I think if just waiting for monetary policy it’s hard to help the economy nowadays. Perhaps this is the right time when we have to consider again the limit of public loans, relieving budget overspending so that we can increase public spending, increasing investment and the total demand for the economy. In the time when the economy is declining, there is no other solution that is faster than increasing investment, spending of Government. Most big economies in the world nowadays also implement many demand-stimulus programs to help save production and commerce, stimulating buying power in the market.”
According to Nguyen Hung (VnExpress)
Translator: TM (Unigroup)