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Enterprises would rather deposit money than putting money into business
Listed companies, which are considered the best ones in the national economy, because they have to meet strict requirements on the financial indexes to be eligible for listing shares on the bourse, have also reported the bad business performance for the first three quarters of the year.
Shareholders these days repeatedly receive proposals from the boards of management to agree to lower the business targets for 2011. With high bank loan interest rates and low profits, businesses can foresee that their yearly business plan, set up earlier this year, would be unattainable. SJC plans to reduce the targeted profits by 19 percent, SDU 83 percent, while IJC 40 percent.
High interest rates burdening businesses
Most of the companies which plan to lower the targeted profits are operating in the fields of construction or securities.
The Kinh Bac Urban Development Corporation (KBC), a big guy in the construction industry, reported the loss of 119.38 billion dong in the first nine months of the year, showed that real estate enterprises have reached an impasse due to the lack of capital, since commercial banks now turn their back to the enterprises.
The noteworthy thing is that KBC made a profit of 586.63 billion dong in the same period of 2010.
By October 25, 173 companies listing shares on the HCM City Stock Exchange had submitted the finance reports for the third quarter of the year, which show that the financial costs have increased, especially, the bank loan interest rates have always been staying firmly high, which has caused losses or profit reductions to businesses.
The finance reports show that the high interest rates have eaten up all the profits of businesses. Van Phat Hung (VPH) Company incurred the loss of 10.61 billion dong in the third quarter, because the capital cost of the company was triple that of the same period of the last year. Though the company’s revenue reached 23.95 billion dong, increasing by 49.31 percent, the company still took loss.
Similarly, Huu Lien A Chau (HLA) got the profit of 11 million dong only in the third quarter after it had to pay 58.66 billion dong for bank loan interest rates.
The gloomy stock market has made a lot of securities companies take loss. BSC has reported the loss of 134.6 billion dong, SME 6 billion, VIG 25.8 billion dong, TAS 5.7 billion dong.
The input material price increases, the dong/dollar exchange rate fluctuations and the higher corporate management cost all have caused continued losses to businesses. HHG, for example, due to the petrol, fuel and bank loan interest rate increases, incurred the loss of 1.95 billion dong in the third quarter.
Enterprises would rather deposit money than putting money into business
The big difficulties in doing business have prompted many enterprises to halt their production and deposit their idle money at banks for profits. NNC, for example, has reported the post tax profit of 26.45 billion dong in the second quarter, an increase of 35 percent over the same period of the last year, while the interests from bank deposits brought a considerable proportion of profit.
Some securities companies have also reported profits in the third quarter, despite the VN Index decreases, because they could earn profits from bank deposits.
According to HSC Securities, Hau Giang Pharmacy (DHG) got 35 billion dong in interests from the bank deposit of 500 billion dong. The interests from bank deposits also made considerable proportions to Vinamilk’s and Masan’s profits.
The businesses which have high profits are mostly the ones in seafood, rubber, fertilizer, oil and gas, consumer goods and food sectors. Most of them have been making profits thanks to the increases of product prices.
Official statistics show that in the first nine months of the year, 49,000 businesses reportedly shut down, halted production or went bankrupted. This can partially reflect the true situation of the national economy.
vietnamnet, SGTT
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