A branch of Vietcombank. Enterprises are expecting policies to unlock the credit flow (Photo: VNA)A recent report by the National Private Economic Development Research Boardunder the Government's Advisory Council for Administrative Procedure Reformshowed that enterprises faced unprecedented difficulties in rising globaluncertainty.
The report revealed that enterprises in most sectors were seeing significantdrops in orders and predicted declines in import-export in the remaining monthsof this year and early 2023.
The drop in orders mainly came from the tightening of monetary policy to combatinflation and the risk of economic recession in the US and many Europeancountries, which caused consumption and investment demand to fall sharply. Inaddition, the increasing frequency of trade remedy investigation cases againstVietnamese goods put many Vietnamese at a disadvantage in market access.
Enterprises were also struggling with managing cash flow, including workingcapital and medium and long–term investment capital, making it difficult forthem to maintain operations and prepare for 2023.
"Accessing capital to maintain production and business has been thebiggest challenge, especially for the private sector. The problem becomes moreserious as the cash flow of enterprises has dried up after more than two yearsof struggling with the COVID-19 pandemic," the report wrote.
For example, in the steel industry, many enterprises were forced to sellproducts 30-40% lower than the cost to have operating cash flow while waitingfor credit allocation.
In the part-supply industry, signed contracts or real estate assets couldpreviously be used as mortgages for credit. Now, banks do not process thedisbursement due to the pressure about remaining credit rooms.
Enterprises in the agricultural sector needed more capital to purchase rawmaterials when harvest seasons for many crops were coming at the end orbeginning of the next year.
Nguyen Toan Thang, Director of the Toan Thang Limited Company, said that it wasdifficult for small companies like his to get access to banking credit at themoment.
According to To Hoai Nam, Permanent Deputy President of the Vietnam Associationof Small and Medium Enterprises (SMEs), although banks had credit packages forSMEs, it remained difficult to access them.
Banks should be more flexible in the evaluation process, Nam said, adding thatthe Government needed to develop a mechanism to lower lending standards forSMEs to ensure the loans were accessible.
In the context of exhausted credit flow, enterprises were forced to raisecapital from other markets, including the stock market and corporate bondmarket, Can Van Luc, a member of the National Financial and Monetary PolicyAdvisory Council, said.
Luc cited statistics that the corporate bond market had so far raised 2.47quadrillion VND but now was in a crisis after violations of real estatecompanies Tan Hoang Minh and Van Thinh Phat, which also caused a tumble in thestock market recently with the VN-Index falling to around 900 points and themarket cap vaporated nearly 19 billion VND.
This year's issuance of the corporate bond market also dropped by 25.2% to 328.9trillion VND compared to 2021 and on a quarter-on-quarter decline.
Unlock capital flow
Some experts said that a slight increase in the credit growth quota should beconsidered.
Le Xuan Nghia, an economic expert, said that raising the credit growth quota by1-2% would help the economy warm up.
However, supervision must be enhanced to ensure the credit flow goes to theright addresses, Nghia said.
Financial expert Huynh Trung Minh said that in the context that enterpriseswere in high demand for capital, it was necessary to widen credit growth roomin the remaining months of this year for sectors such as production, businessand export.
He said that credit growth quota should be allocated for banks with highcapacity and capital adequacy ratio (CAR), adding that credit should bedirected to sectors such as production, business and exports.
The State Bank's message was unambiguous: the central bank is determinedto meet a credit growth target of 14% this year with flexibility for macrodevelopments. So far, credit has totalled 11.8 quadrillion VND, a growth of 11%,compared to the 4.8% growth of deposits.
Minh said that it could only be expected that the credit room would expandslightly. This was because banks raised funds to pump capital into the marketwhen credit quotas exist.
Banks should provide working capital, mainly short-term capital, for the economy.On the other hand, enterprises should go to the capital market to raise mediumand long-term capital.
Consolidate confidence
Dang Hong Anh, President of the Association of Young Vietnamese Entrepreneurs,said that the most important thing was to rekindle the positive sentiment ofinvestors.
Nguyen Dinh Cung, former Director of the Central Institute for EconomicManagement, said that it was vital to have a clear, consistent and stablepolicy message to consolidate market confidence and make enterprises feelsecure and motivated to strengthen production and business.
To help enterprises overcome the difficult time, the National Private EconomicDevelopment Research Board proposed that the relevant ministries provideregular updates about market fluctuations and consultancies for enterprises todevelop their business plans.
Several support policies, such as reductions in value-added tax and fees,should also be prolonged to the end of 2023.
Preferential credit packages should be designed for prioritised sectors andSMEs./.
VNA
