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003 SMEs grapple high inflation, global credit crisis
A new programme aims to improve management of small and medium-sized enterprises (SMEs) across Vietnam .
Launched by the Association of Vietnam’s Small and Medium Sized Enterprises, the programme aims to help SMEs during a time of high inflation when these enterprises face increasing challenges to remain viable.
The country now has more than 300,000 enterprises, with SMEs accounting for 97 percent. Among these SMEs, enterprises that have capital of less than 1 billion VND (60,600 USD) account for 42 percent, while enterprises that have capital of more than 10 billion VND (606,600 USD) only account for 13 percent.
Dinh Thi My Loan, former head of the Department of Competitiveness Management under the Ministry of Industry and Trade, said SMEs with capital of less than 1 billion VND faced the risk of going bankrupt during the current high inflation.
Loan said management of Vietnamese SMEs now faced two main challenges: regulation and strategy. Regulatory efforts have focused on State enterprises, while developing sound business strategies for SMEs was difficult as competition from large enterprises was tough to overcome, especially as some large enterprises had market monopolies. As the domestic market opened, both foreign enterprises and large domestic enterprises would affect the viability of many SMEs, said Loan.
Economist Le Dang Doanh, former head of the Central Institute for Economic Management, said all enterprises faced big challenges due to high inflation and the international financial crisis.
Fiscal upheaval throughout the global economy would impact Vietnam ’s exports, especially to the US market, which is Vietnam ’s largest market, said Doanh.
However, enterprises may feel a little optimistic as the US financial crisis also limits American buyers’ consumption demands, particularly for luxury items. This means more US consumers many buy more competitively-priced products from Vietnam . Enterprises have been urged to re-analyse their business models and product ranges, re-balance their spending and try to limit risks by shortening the time it takes for returns on invested capital.
Business management administration capability could be raised by changes in management styles as well as improvements to access market information, said Doanh.
Nguyen Manh Quan, director of the Centre for Enterprise Development and Consultancy, said SMEs should limit their work to only some stages of production and distribution of commodities, because of their limited scale, capital and markets.
Advising Vietnamese enterprises on ways to cope with inflation, Dinh Thi My Loan said enterprises should make full use of their potentials and company leaders – while enterprise administrators should endeavour to shift business strategies from “defence to attack”.
In addition, Loan said enterprises should work on forecasting the impacts of high inflation on all business activities, especially for SMEs.
Loan said the Government should establish a working group that could rapidly react to help enterprises solve problems caused by inflation. The Government should also exempt or reduce import tax and enterprise income tax for some products and industries that faced many difficulties, she said.
VNA
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