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Enterprises in trade villages miserable because of no capital
It is estimated that 40% of enterprises in trade villages are ‘at the point of death’, while the other 60% are struggling to survive, according to Chairman of the Vietnam Association of Trade Villages Vu Quoc Tuan.
Tuan has rung the alarm bell about the serious threat of bankruptcy facing small enterprises in trade villages, emphasising that the ‘situation has become very serious’.
Tuan said that he disagreed with the saying that the dissolution of enterprises is ‘constructive’ and a normal thing in a market economy, stressing that the bankruptcy of a massive number of businesses should be seen as a serious problem.
“The theory about constructive bankruptcy is true in developed countries, not in Vietnam, where Vietnamese people are poor, and the money Vietnamese people spend to set up businesses is all their assets,” Tuan said.
He went on to say that small- and medium-size enterprises, including enterprises in trade villages, have been creating a lot of jobs, generating more products for society and helping curb inflation, so it is important to try to curb the bankruptcy ratio of the enterprises at the lowest level.
He said that the tightened monetary policies, which aim to curb inflation, have put big difficulties on businesses’ operations. The overly high interest rates of 20-21% prove to be unaffordable for small enterprises, which makes them unable to access bank loans to maintain production.
Several banks have announced programmes on loaning to small enterprises. However, Tuan said, enterprises are still facing a lot of difficulties.
The problem is, according to him, banks have set stricter requirements related to mortgaged assets for loans and enterprises’ business plans for loans. As a result, enterprises in trade villages have to seek capital from ‘black credit sources’, and borrow money at exorbitant interest rates of 7-8% per month (banks are now lending at 1.8% per month on average).
Tuan has urged local authorities to establish credit guarantee funds for small- and medium-size enterprises as the best solution to help enterprises seek official capital sources.
The regulations on the establishment and operations of credit guarantee funds were promulgated by the government in December 2001. However, to date, the funds have only been established in nine provinces, and only the funds in Tra Vinh, Yen Bai and Vinh Phuc provinces are officially operational.
There are 2,017 trade villages in Vietnam, which employ 10mil labourers. 40% of the products of the villages are exported to 100 markets. The export turnover of the trade villages reached $750mil in 2007, not including $2.4bil worth of woodworks.
VNA
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