HCM City seeks solutions for beleaguered firms

The HCM City government will focus all of its effort in seeking solutions to ease the hurdles challenging municipal enterprises, said city chair Le Hoang Quan at a meeting yesterday.

“What matters now is helping businesses maintain production and ensure jobs for labourers,” he said at the meeting to review the city’s eco-social development in the first quarter.

As of mid-March, 4,998 new businesses have been established in 2012, up by 31 percent year-on-year, a report from the municipal People’s Committee showed.

However, the newly registered capital was only VND23 trillion, a 7 percent decline.

“This means new firms are set up with a lower investment scale,” the report stated.

In the meantime, 931 other businesses have also blocked their tax codes to dissolve, 526 of which have completed the dissolution procedures, according to the municipal Department of Planning and Investment.

That figure rose by 24 percent against the same period last year, the department said, adding that most of the dissolved businesses, or tSTC suspending operations, are in the trading, construction, transporting, and tourism sectors.

“With the ratio of dissolved company to newly-established firm around 10 percent, the statistics recorded this year are still at the normal rate,” commented Thai Van Re, head of the department.

Meanwhile, Nguyen Van Lai, head of the municipal Department of Industry and Trade, said medium- and small-sized enterprises are facing a myriad of difficulties, with a rising unsold inventory index.

The municipal government partially attributed the sluggish operations of the businesses to economic turbulence and the long holidays of the Lunar New Year.

“However, the major culprits are the rising input costs, following the soaring global fuel prices, and the exorbitant interest lending rates,” the city said.

“These factors have affected the products’ cost prices, reduced buying power, and increased unsold inventories.”

Consequently, the city saw the index of industrial products in Q1 rise by only 2.7 percent, while the figure recorded in the same period last year was as high as 6.9 percent.

Capital issue

Speaking at the meeting, Nguyen Thi Hong, deputy chair of the municipal people’s committee, demanded that the Department of Industry and Trade submit a report about the capital supplied to the development of businesses.

“What are the highest and lowest interest rates businesses have to pay, and how many borrowers actually accessed bank loans last quarter?” she asked.

“Only with such detailed data in hand can we evaluate the situation precisely, and have the basis to work with the State Bank of Vietnam and other relevant agencies to provide capital support to businesses,” said Hong.

Meanwhile, Nguyen Hoang Minh, deputy head of the HCM City branch of the central bank, confirmed that the city enjoyed credit growth of 0.43 percent in the first three months, while the country’s figure is -2 percent.

“This is thanks to the huge effort from banks to support capital for the economic sectors,” he said.

However, Minh failed to provide a particular answer as chair Quan asked, “Exactly how many businesses have successfully borrowed loans?”

 

Category: Economy