Enterprises anticipate business shrink due to weak domestic demand

86.3pct of surveyed enterprises said that the acceptable interest rate would not exceed 15pct per year and 72.2pct of asked firms would admit the maximum lending rate of only 14pct per year, according to General Statistical Office of Vietnam (GSO).

The survey among 9,331 enterprises conducted by this agency from 1 January 2011 to 1 April 2012 revealed 8.4pct experiencing halted production, bankruptcy and dissolution which is rather high for the present time yet common at almost all nations amid crisis. 69.6pct of these troubled businesses blamed it on losses; 28.2pct found fault with capital shortages; 14.7pct admitted stagnant products; 11.7pct reported difficulties related to manufacturing sites; 4.6pct opted for closure for establishing new business and the similar percentage closed for mergers.

It is estimated that some 57.8pct enterprises are debt-funded, 33.5pct of which suffer the average lending rate of above 19pct, 83.6pct suggested acceptable rate of below 15pct and 72.7pct proposed the annual affordable rate of less than 14pct.

Also, the major obstacles that hurt businesses most reportedly include soaring lending rates, surging inflation and erratic changes, limited access to bank loans, high transportation costs, unstable electricity supply and unpredictable economic policies.

Presently, some 31.7pct of enterprises anticipate likely business shrink principally due to weak domestic demand, limited approach to bank credit and difficulties in purchasing input materials.

Around 13pct of surveyed enterprises expect to lay off employees, 10pct scale down capital, 25.6pct suffer revenue decreases and 27.9pct experience profit declines.

In addition, 8pct of enterprises particularly Central Highland’s small and medium sized ones which are required to make payment of value added tax or special consumption tax failed to fulfil such obligations in 2011.

As a consequence, this agency urged for joint assistance from the government, ministries and branches so as to stabilise lending rates, electricity prices, tame inflation, boost exporting and the like.

 

Category: Finance