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Experts suggest ways to raise capital
Experts met yesterday to discuss ways for enterprises to effectively raise capital for their operations in the midst of challenges next year.
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| Steel tubes are ready for sale at Bac Viet Steel Co in northern Bac Ninh Province. Enterprises are exploring ways to raise capital for their operations despite the economic downturn. |
"Curbing inflation and tightening credit will continue next year, and the cost of electricity will increase by up to 15 per cent," said former deputy minister of commerce Luong Van Tu.
Enterprises should reassess their chances of recovery in their respective markets and adjust targets accordingly, he said.
"In order to ensure capital flow, producers must be willing to lower prices, claim back investment capital and reduce inventories."
In addition, companies should concentrate solely on their areas of expertise and look to acquire assets in other firms on the grounds that they would generate profits when the market rallied.
The value of many companies has declined by up to 50 per cent. "This is a good time to purchase assets," Tu noted.
Once enterprises restructured themselves, banks would agree to grant loans, said Tran Quang Thang, head of the Central Institution for Economic Management. "Banks will look at corporate characteristics, cash flow, capital allocation, mortgages and economic conditions before making a decision."
These five factors would be important in the midst of a challenging economy, so enterprises should give persuasive detailed reasons and targets for borrowing, he added.
If they were turned down for bank loans, enterprises could still find sources of capital from credit guarantee funds, factoring companies and asset-based lending.
Another source of capital would be foreign investment funds.
Nguyen Dai Lai, deputy head of the central bank's Credit Information Centre, added that other measures could help such as allowing business associations to establish investment funds or financial companies from their members. "Other forms of collaboration among the associations and the members had better be reinforced," Lai said.
The Government should also issue regulations to bind the responsibility of suppliers to producers.
However, Lai said that sourcing capital still had to come under the task of curbing inflation in accordance with the Government's monetary and fiscal policies.
With the international and domestic economies facing difficulties and the Government cutting public spending, the public-private partnership model would create new opportunities to raise funds, stated vice president of the Viet Nam Chamber of Commerce and Industry vice chairman Doan Duy Khuong.
Authorities estimated that capital demand for infrastructure by 2020 would account for 10-11 per cent of GDP. At least for the coming decade, Viet Nam would need around US$70-80 billion. The Government encouraged every sectors of the economy, including foreign investors, to invest in infrastructure, Khuong said.
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