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Production inventory up by 35% last month
The inventory index of the manufacturing and processing industries increased by 34.9 per cent over the same month last year, as reported by the General Statistics Office (GSO).
According to the office, the sectors with the highest inventory growth included fruits and vegetables, which rose by 87 per cent, fertilisers and nitrogen compounds by 62.7 per cent, iron and steel by 59.1 per cent, tobacco by 58 per cent, cement, lime and mortar by 55 per cent and motor vehicles by 38.7 per cent.
GSO economists blamed the situation on declining purchasing power, which hampered production and distribution systems. The office reported that the consumption index only increased by 0.5 per cent over the same period last year.
The inventory index has remained relatively high for a number of months, alarming many economists, and proving that inventory is too high across many sectors.
Because of increased overhead, particularly coming from rising the price of energy, petrol, wages and higher interest rates, many enterprises feel compelled to sell off inventory at cut-rate prices.
Cao Sy Kiem, Chairman of the Viet Nam Association of Small- andMedium-Sized Enterprises (SMEs), said that Government measures to control inflation and stabilise the economy over last months have had some positive results. However, he added, they have also added unforeseen obstacles for businesses.
He said access to capital was one of the biggest problems confronting Vietnamese SMEs, along with rising interest rates. He warned that as long as the current situation continues, there will remain a looming threat of the dissolution or bankruptcy of a large number of businesses.
Truong Phu Cuong, Chairman of the Construction and Building Materials Association, commented that, despite the recent 1 per cent reduction in interest rates, many businesses were still struggling to continue their operations.
He said that last year's inventory growth of 34.9 per cent posed a problem for the economy as a whole, as year-on-year inventory growth was usually around 12 to 15 per cent in normal economic conditions.
Vu Duc Dam, Minister and Chairman of the Government Office, said that the Government was exploring measures to foster both exports and domestic trade.
"The State Bank of Viet Nam is working on ways to stabilise the financial market and improve the credit situation for SMEs in a bid to boost the country's economic growth," he said.
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