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Don’t let businesses die because of injustice
Cao Sy Kiem, Chairman of the Association of Small- and Medium-size Enterprises, said that small- and medium-size enterprises (SMEs) need the support of the government, and that the bankruptcy of a massive number of enterprises would negatively affect society.
Could you please tell us about the difficulties SMEs are now facing?
The tightened monetary policies have been hindering the development of businesses, including SMEs.
SMEs now account for 40% of annual GDP. We can classify SMEs into three types 1/ businesses which have their own capital and do not have to borrow money from banks or do not have to borrow much 2/ businesses which have capital, but not much, and they still have to borrow from banks when they need working capital 3/ businesses which rely entirely on bank loans. The third type now accounts for 50-60% of total SMEs.
I can say that SMEs now have a lot of difficulties, especially difficulty in accessing bank loans.
What do you think about the viewpoint that the biggest difficulties are still ahead?
I agree with the viewpoint. Monetary policies don’t show effects until after 3-6 months. The policies will bring the desired effects, and side effects as well. The fourth quarter of 2008 and the first quarter of 2009 will be the most difficult period for businesses. By that time, the capital of businesses will have become exhausted, the periodic high inflation cycle will come, and the side effects of the tightened monetary policies will be more clearly seen.
Do you think that only the strongest businesses will be able to survive the difficulties, while weak businesses will be eliminated? And should this be seen as a normal thing in a market economy?
Bankruptcy is a normal thing seen in every market economy. However, in Vietnam’s economy, which is not a perfect market economy, the competition is sometimes unfair, and the death of a massive number of businesses will cause bad impacts on society. The violent elimination of business sometimes leads to death because of injustice.
Some banks have announced lending interest rate cuts and preferential policies for some subjects, but businesses still complain that they are facing a lot of difficulties. What is your viewpoint about the issue?
I know a lot of enterprises which have good markets and prospering business but they lack capital. If such enterprises go bankrupt, unemployment will become worse, while the volume of goods will decrease. In these cases, I think that the government needs to support then, no matter which fields they are operating in, production or service, import or export. Besides, commercial banks should also think of assisting businesses, because if businesses are in danger, banks will also suffer difficulties.
So the solutions and the lines of action have been clarified. What about the feasibility of the solutions?
There exist a lot of problems in structure, monetary policies, fiscal policies, public investment, and coordination among relevant ministries and branches.
The disease has been discovered, and remedies have been discussed. However, recovery from the illness will still depend on the medication schedule and dosage and many other factors. Effective coordination in teamwork among relevant ministries and branches will play a very important role.
VNN
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