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SMEs told to cope with tough times ahead on higher fuel prices
Local experts have urged small-and medium-sized enterprises (SMEs) to tighten their spending and take prompt action to deal with existing and new challenges in the long term, especially after the fuel prices shot up by 31%.
"The toughest time is ahead," economist Le Dang Doanh told more than 200 representatives of SMEs at a seminar on inflation and how to support enterprises in HCMC on Wednesday. He called on them to map out effective plans to deal with the situation.
Doanh proposed a host of measures including restructuring and cost cutting for SMEs to ride out the tough time.
"SMEs must restructure their operations and product lines, and identify what products are .profitable and should be maintained," he said.
Doanh advised SMEs not to neglect and leave their customers this time around as their overseas competitors were waiting to take advantage of their difficulties. It is important that SMEs tell their employees as well as customers' and investors about their actual situation so that they would sympathize and be able to propose good solutions.
Doanh noted difficulties were compounded by the fuel price hikes, regular power cuts, extra freight charge for the containers jammed at ports, and the appreciation of the Chinese currency Yuan over the U.S. dollar for those companies sourcing materials from China.
However, he brushed aside a suggestion that business leaders temporarily shut down their factories until the hardest time was gone as a situational measure because this would affect their employees.
"Now is the time for the leaders to fulfill their corporate social responsibility to the fullest. They can't close their business but should manage to save their business," Doanh said.
Cao Sy Kiem, chairman of the Vietnam SMEs Association, shared Doanh's views and suggested enterprises to make the most of their human resources in addition to cost saving.
Agreeing with Doanh and Kiem, the HCMC Enterprises Association's chairman Huynh Van Minh said companies were now put to a tough test, particularly after the fuel price rise coupled with repeated power outage that has dealt a heavy blow to them.
"Minh insisted local enterprises to forge close cooperation among them and with foreign counterparts to overcome difficulties and to grow strongly together. He also wanted banks to step in to provide assistance with capital for those in need.
Both Minh and Doanh did not agree the way credit was tightened at the moment, stressing that this policy should apply to those areas and companies that worsen inflation.
"Credit is needed for exports as it supports Vietnam's growth and for the projects that help turn out necessary consumer's products for the country," Minh said.
He added that money supply was one of the keys for enterprises to solve problems.
Minh warned SMEs of tougher times in 2009 when the local market is open more to foreign companies in line with the country's fulfillment of World Trade Organization membership and further integration into the global market.
Doanh advised SMEs to prepare themselves to grapple with new challenges in the first half of 2009 before all major problems were solved, hopefully in the second half of next year. He also told SMEs to stand ready for the worst scenario so that they can maintain their business.
Pham Hai Tung, vice chairman of the Vietnam SMEs Association, told reporters after the seminar that corporate bankruptcy was normal, and it was not a surprise if more companies would go bust in a tough time.
Tung said statistics showed Vietnam now had more than 300,000 enterprises and 95% of them were SMEs and weak in capital and governance.
Tung called for the Government to help enterprises overcome difficulties before they gained strength to develop.
VNN
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