Large inventories plague local companies
Large inventories plague local companies
Inventory is still a major concern for Vietnamese businesses, according to a survey released yesterday at a seminar held in HCM City.
Nearly 63 per cent of surveyed businesses said that it remained a concern during the first six months of this year, compared to 73 per cent in the last six months of 2012.
The survey was conducted by the Viet Nam Chamber of Commerce and Industry (VCCI) in May and early June, with the participation of 700 businesses nationwide.
The aim was to give an overall view of the business environment as well as attitude toward Government policies. The seminar was organised by VCCI under the sponsorship of VPBank.
Doan Thi Quyen of the VCCI's Enterprise Development Institute said that businesses had faced difficulties in finding buyers.
To solve inventory back-up, survey respondents said they were looking for new export markets (49.9 per cent), and cutting prices and offering promotions (28.7 per cent). Only 8.9 per cent of businesses said they were taking goods to rural areas for sale.
The survey showed that the business and production situation in the first six months of this year was worse than in the last six months of 2012.
Profits on each product unit saw the sharpest decline, followed by low productivity per machine and a drop in the number of orders.
However, Vietnamese enterprises said they thought the situation would improve in the last six months of 2013.
According to the survey, in the first six months of the year, 54 per cent of businesses said they needed to borrow capital from banks, while the figure was 57.3 per cent in the last six months of 2012.
Quyen said although the Government had asked the State Bank of Viet Nam to lower interest rates, fewer businesses had been asking for loans.
Among the businesses that need bank loans, only 36 per cent of them have received approval from banks to borrow loans.
Money from loans have been used mostly for new business plans and expenses (salaries, debts and payments to suppliers), according to survey respondents.
For the rest of 2013, 66.7 per cent of surveyed businesses said they would keep production scales unchanged and 22 per cent said they would expand production.
More than 28 per cent said they hoped for more export opportunities and 18 per cent said they wanted the State to offer more financial support to businesses.
The survey showed that macroeconomic policies had improved compared to last year, with new tax policies and a stable legal environment.
At the seminar, Dang Duc Thanh, a member of the VCCI's executive committee, said that Vietnamese businesses should focus on restructuring their companies.
He said they should reduce reliance on bank capital and try to have a 1:1 ratio of bank capital and their own capital.
In the past, borrowed bank capital was three to 10 times higher than business-owned capital, leading to an increase in bad debt at banks, he said.
"Businesses need to be proactive in seeking many different capital sources to replace bank capital, including the issuance of corporate bonds and more joint-venture cooperation," he said.
Thanh suggested that the Government consider re-adjusting lending interest rates to 7 per cent per year as other countries (Thailand, Singapore) in the region have done.
Many countries such as Taiwan and Japan have issued low lending interest rates of 2 per cent and 1 per cent per year, respectively.
Vu Kim Hanh, chairman of the High Quality Vietnamese Products Business Association, said that businesses should also renovate technology and improve management to increase competitiveness.
To accomplish this, Government support was needed, he said. Businesses also needed help to take goods to rural areas for sale.
Hanh emphasised that multinational corporations had become dominant players in the department store and supermarket fields, so local players must improve competitiveness to survive.
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