HCM City firms call for stable logistics costs, lower bank lending rates

HCM City firms call for stable logistics costs, lower bank lending rates

HCM City businesses posted solid first-quarter results but face rising costs, tight credit and slowing demand, prompting HUBA to call for lower lending rates, stable logistics costs and transport support.

A plywood manufacturing factory in HCM City. Exporting firms in the city have called for lowering bank lending rates to below 6 per cent and improving access to capital. — VNS Photo Xuân Hương

HCM City businesses may have done well in the first quarter, but are facing rising costs, tight credit conditions and slowing demand, prompting calls to cut bank lending rates, stabilise logistics costs and introduce transport support measures, according to the Ho Chi Minh City Union of Business Association (HUBA).

A HUBA survey of business performance for the quarter found that various challenges notwithstanding, especially Middle East tensions driving up fuel prices and sharply increasing logistics costs, small- and medium-sized enterprises (SMEs) remained in fairly good shape.

Some 86 per cent said revenues remained steady, while 75 per cent reported steady profits.

Notably, 91 per cent said the city’s investment and business environment is improving.

Looking ahead to the second quarter, 79.5 per cent expect to do even better and 86 per cent plan to hire additional workers.

But there are difficulties, mainly a shortage of orders, human-resource hiring challenges and rising rents.

Over 54 per cent cited rising input costs as a major challenge, and 41 per cent were affected by sudden increases in transportation costs.

Nearly 48 per cent said they are forced to borrow at high interest rates with access to credit becoming increasingly tight.

According to HUBA, bank lending rates are mostly above 8.5 per cent and reach 14-15 per cent in some cases, placing pressure, especially on exporting firms.

Amid market volatility, particularly the Middle East conflict, which is prolonging shipping times and extending working capital cycles, businesses have called on banks to adopt more appropriate credit mechanisms.

Exporters have sought a cut in lending rates to below 6 per cent.

The business community also called for measures to reduce logistics costs like studying support tools such as logistics cost stabilisation mechanisms and transport support funds during periods of sharp fluctuations.

Selective export bonuses for key sectors could also be considered, they said.

Many of the surveyed companies proposed reductions in income tax, faster tax refunds and improvements to import-export regulations.

A notable recommendation was to promote the development of the “silver economy”, which encompasses all economic activities related to the consumption, care and active participation of the elderly.

HUBA said, as the city enters a phase of population ageing, it should accelerate the development of services for seniors, including healthcare, financial services, tourism and home-based services.

Authorities should encourage businesses to develop specialised products and services for the elderly, and pilot age-friendly urban and community models to expand markets and create new growth drivers, it said.

It called for support in green transition efforts, including credit mechanisms, emissions reduction, investment in clean technologies, energy efficiency and the development of circular and energy economy models linked to green supply chains and logistics, helping businesses meet international standards and enhancing their competitiveness.

The city should also clearly identify priority sectors for targeted support to private enterprises and consider piloting regulatory sandbox mechanisms for new business models, enabling companies to adopt new technologies more easily and improve competitiveness, it added. 

Bizhub