Workers seen during a shift at a stationery manufacturer in HCM City. (Photo: VNA)Asthe end of the year approaches, businesses have been ramping up efforts to getback into the game, especially to meet greater demand for goods and services inthe upcoming holidays.
HoChi Minh City's food producers must secure a large amount of capital soon sothey can stockpile raw materials and plan their production in anticipation ofChristmas and traditional Tet holidays,said Ly Kim Chi, Chairwoman of the HCM City Food and Foodstuff Association.
Acapital injection is especially vital at this point because most businesseshave run out of what little emergency funds they had during the lockdown as itwas costly to keep production running using the three-on-site method,which required businesses to provide workers with accommodation, food andCOVID-19 tests.
DoPhuoc Tong, President of the HCM City Mechanical and Electrical EnterpriseAssociation, said securing bank loans would likely prove to be a challenge formost small-to-medium-sized enterprises as they lack assets to put up ascollateral.
Businesseshad asked commercial banks to relax regulations to support businesses duringthe pandemic.
"Themajority of mechanical and electrical firms are those who have developed slowlyover time from small businesses and as such, they often have a solid foundationand strong expertise. While said firms rarely go under, commercial banks aren'tparticularly interested because of their low-profit margin," said Tong.
NguyenQuoc Anh, President of the HCM City Rubber and Plastic Association, said theassociation members had been struggling to cope with higher input prices, asmuch as a 20 percent increase, since the beginning of the year. There has beena shortage of raw materials as the global economy was recovering, whichwill likely drive prices up even further. To make matters worse, other costsincluding COVID-19 prevention and logistics have also been climbing.
Meanwhile,demand had not fully recovered and sales had been slow, which severely affectedcash flow. The grim situation was expected to last at least until the end ofthe year.
"Asof now, most of our members have run dry on cash to meet their financialduties. We have asked commercial banks to consider granting credit extensionsand debt restructuring, especially in support of domestic businesses,"said Anh.
Thereis still room to give additional credit to businesses in HCM City, according toNguyen Hoang Minh, Deputy Director of the State Bank of Vietnam's (SBV) HCMCity branch.
Minhsaid since the beginning of the year, credit growth in the country's largesteconomic hub was recorded at 6.41 percent. By the central bank's projection, creditgrowth for the whole year would likely hit 12 percent, giving banks a lot ofroom to manoeuvre during the last quarter of the year.
Commercialbanks said they were to cut interest by 1 percent along with waiving bankingfees, a move that has been well received by the business community. By SBV'sestimation, 400,000 businesses were to benefit from this support package.
"Wehave demanded banks to give all the support they can to help with economicrecovery and to support businesses. The SBV will stay committed to seeing banksfulfilling their pledges and those who failed in doing so will facesanctions," said Minh.
Anotherof SBV's priorities in the months to come is to help connect businessesand banks. So far, a number of commercial banks have pledged to supportbusinesses with 70 trillion VND (3.07 billion USD) in low-interest loansduring the last quarter of the year.
Regardingsome businesses' inability to provide collateral, Minh said the SBV had beenworking on a number of alternative methods to allow both businesses and banksto overcome current regulatory hurdles./.
VNA
