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75% of Vietnamese SMEs cut off official funding
Some 75 percent of small and medium-sized enterprises in Vietnam cannot raise funds from the stock market or banks, according to a survey by a German organization and the Hanoi-based Central Institute for Economic Management.
CIEM’s deputy head, Vo Tri Thanh, who released the survey results at a workshop held by the UK-based Association of Chartered Certified Accountants (ACCA) and Doanh Nhan Sai Gon (Saigon Businesspeople) newspaper, said only a quarter of SMEs can raise funds by issuing bonds or stocks or borrowing from banks since the funding sources prefer bigger firms.
With assistance from state-run credit guarantee funds for SMEs in Hanoi and Ho Chi Minh City being inadequate, banks deny them funds by strictly applying credit rating standards.
For their part, SMEs fail to provide proper collateral to loans and lack financial transparency, feasible business plans, or clear debt payment plans.
Though SMEs worldwide have shown their ability to overcome the global economic recession, capital shortage remains a real challenge for them in achieving full recovery, Thoi Bao Kinh Te Sai Gon Online (Saigon Economic Times Online) quoted Brendan Murtagh, ACCA president, as saying about another survey conducted by the Economist Intelligence Unit.
The credit shortage may linger until 2011, with some 29 percent of SMEs worldwide remaining in trouble this year, he said.
But the economic outlook seems brighter for those SMEs this year, with the Economist Intelligence Unit’s survey revealing that many of them believe revenues and profits would increase, Murtagh added.
Another survey, this one by the CIEM, Ministry of Labor, War Invalids and Social Affairs, and the Danish International Development Agency, found only 1 percent of Vietnamese SMEs thinking their business would not be better this year, while 12 percent said the situation would improve.
They felt the crisis has cut the prices of inputs, worn out intra-sector and cross-sector competition, and pushed policymakers to offer more incentives.
Some 10 percent of SMEs exited the market last year, up 3 percent over 2007, but still an acceptable rate, Thanh said.
SMEs account for 95 percent of total businesses in the country. The 400,000 SMEs employ more than 50 percent of the total workforce.
vietnews, tbktsg online
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