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Banks are slow going with stimulus packages
Many businesses are facing urgent problems and the banks have been slow in providing assistance, says Dr Cao Si Kiem, President of the Vietnam Small- and Medium-sized Enterprises Association.
On top of that, many businesses cannot borrow capital as they fail to meet the banks’ lending conditions.
The government has introduced a number of solutions to support enterprises, such as guaranteeing them loans from commercial banks, and helping them to pay their workers’ salaries and insurance, plus providing payments to workers who have been laid off.
All these efforts, however, have proved unrealistic, says Mr Kiem, who warns that with the high risks involved, the banks must be sure that all loans can be repaid. In fact, this has left enterprises with little chance to access bank loans.
If a financially overstretched business can access capital in time, it is better capable of resuming its operations, says Nguyen Quang Dung, Director General of the Vietnam Development Bank (VDB). Nevertheless, as many as 220,000 businesses are unlikely to meet the conditions that banks stipulate before agreeing to lend.
Many financial experts have described cooperatives in rural areas as most susceptible to risks in business because they do not have mortgage assets and usually perform poorly when attempting to prove the feasibility of their projects.
World economists have spoken highly of Vietnam’s potential to develop in the medium and long term and the country should take into account the post-crisis period to build on its advantages.
Specifically, the state should be ready to fill the gaps which the commercial banks will face when the economy recovers and perks up.
However, many businesses are hesitant about taking out loans to pay their workers’ salaries as they fear that this would affect their trademark.
As textiles and garment enterprises have to dish out large amounts of cash in salaries and social security due to the large number of workers they employ, many of them do not intend to take out loans even at zero rate. In their view, sooner or later they will still have to pay off large debts.
So far, many workers who lost their jobs in 2008 have returned to their hometowns and found new jobs. Therefore, it would be a waste of time paying their salaries, which would include their travelling costs when they agree to come back and work for their employers.
Businesses are facing a real dilemma - how to keep their highly-skilled workers on the payroll when they are short of money.
VietNamNet, VOV
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