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Number of dissolving firms surges
Nearly 49,000 compaies closed down during the first nine months of this year due to economic difficulties and high lending interest rates (Up 21.8 per cent), according to Minister of Planning and Investment Bui Quang Vinh.
He said that among the enterprises, 5,803 had dissolved, 11,421 had closed down, and 31,477 had stopped paying taxes, having not ceased operations yet.
The ministry said that enterprise production and trading had faced considerable difficulties in the context of domestic monetary tightening and global economic turmoil. Limited credit and high lending interest rates had additionally caused numerous enterprises to decrease production and business activities due to loss.
Deputy Director of the Department of Industry and Trade of southern Can Tho Province Duong Nghia Hiep said that high lending interest rates remained the largest challenge to the survival of enterprises, having caused a high rise in production costs and a sharp reduction in competitiveness.
Commercial banks have pledged to cut lending interest rates to 17-19 per cent per year since earlier last month, however, most enterprises, especially the small- and medium-sized, still had to borrow at 21-23 per cent.
Director of the Hoan Cau Garment Co Bui Van Chinh said that his firm could not access lending interest rates at 17-19 per cent, adding that the lowest rate a bank had offered them was 21.5 per cent, provided that the enterprise having been proven solvent and a regular bank customer.
Enterprises throughout the industrial production sector focused on engineering, plastics and electronics, also confirmed having to borrow at a rate of 22-23 per cent.
Nguyen Van Binh, Director of the Hoang Tan Engineering Production Company, said that production currently struggled against rising input costs related to labour, material and interest rates. Despite suffering losses, many enterprises still had no choice but to maintain production to hang on to customers, he added.
Experts said that enterprises specialising in agricultural production and trading were the most vulnerable as profits gained were often three to four times lower than that of other industries.
According to the Government, 57,800 firms licensed business certificates in the first nine months of the year with total registered capital of over VND363.7 trillion (US$17.3 billion), down 7.8 per cent and 4 per cent in volume and value compared to the same period last year.
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