At the recent “Business Development Forum: Eliminate Difficulties, Create New Enterprise Development Space,” enterprises, trade associations and experts said that the production and business situation is expected to continue to face many difficulties in the coming period.

This presents a need for Vietnamese companies to innovate and keep up with new trends. Otherwise, competitiveness will decrease and opportunities to penetrate deep into the global value chain will be lost.

THE MOST IMPORTANT ARE INSTITUTIONS

Commenting on the current difficulties facing businesses, Mr. Cao Tien Doan, chairman of the Thanh Hoa Business Association, said that more than two years after the outbreak of the Covid-19 pandemic, when they had just started to recover, businesses are immediately faced with new regulations on fire safety. While coping with fire safety and firefighting work to resume production and business operations, the company continued to experience sudden and prolonged power outages.

Due to the complicated economic and political situation in the world, high inflation and shortage of raw materials, market prices have skyrocketed and been unstable. Orders fell due to weakening global and domestic aggregate demand. Lending has tightened, interest rates have risen, capital flow to manufacturing and businesses has stalled, although the government has enacted numerous measures to support businesses, such as a 2% support package to cut interest rates on loans, debt restructuring, debt freezes and interest payment delays for businesses. In reality, however, the number of companies that benefit from and access it is very small. The reason is that there are too many conditions that companies cannot meet.

In addition, most companies are currently facing internal inadequacies of the economy. That is, the institutions and policies are still contradictory, the administrative reform trend has slowed somewhat, which worsens the investment environment for enterprises, and business conditions are facing obstacles that are difficult to overcome compared to the past.

Recently, it has happened that part of state officials and civil servants have shown signs of avoiding and forcing work, being afraid of making mistakes, afraid of responsibility and not daring to decide jobs under their authority, putting companies in an already difficult situation that is becoming increasingly difficult.

“This is considered an ‘underground storm’ in administration, leading to delays in handling administrative procedures, prolonging many projects, causing losses and waste for enterprises, and causing many enterprises to lose all investment opportunities,” Cao Tien Doan said.

Mr. Nguyen Quoc Hiep, chairman of the Vietnam Construction Contractors Association, said the property market is currently slowing, causing difficulties in related sectors of the economy. In the steel industry, for example, data from the Vietnam Steel Association shows that steel consumption fell by 20% in the first six months of this year. Likewise, the cement industry decreased by 10%… The number of projects implemented in 2023 decreased both quantitatively and in scale. In the first six months of the year, government investment increased by 12.6%, but private capital increased by only 2.4% and the FDI sector rose by 3.8%.

According to experts, the cause of this situation lies primarily in the fact that the legal problems are not solved due to lack of synchronization, overlaps and conflicts of the legal document system. There is no complete solution to this deficiency.

Likewise, Mr. Ngo Sy Hoai, vice president and general secretary of Vietnam Timber and Forest Products Association (VIFOREST), said the timber industry has faced many difficulties in recent years.

In fact, the volume of exports has decreased significantly this year compared to previous years for many reasons. However, one of them is because the US market accounted for 55% of the total exports, however, this country applied many trade defense measures and initiated numerous investigations into plywood and kitchen cabinets, resulting in a drop in exports.

Especially compared to other industries, the requirements for wood-based materials are increasing day by day, which brings with it many environmental barriers that also cause problems for companies.

REMOVE BUTTON ONLY FROM POLICY

To remove bottlenecks for enterprises, Mr Nguyen Hong Long, deputy head of the Enterprise Innovation and Development Steering Committee, said from the state administration’s perspective that the Party, the government and the National Assembly have been focusing on economic recovery, especially for enterprises. The government has given top priority to supporting businesses during the current difficult period. According to Mr. Long, however, there are two current policy issues that need to be analyzed.

First, the mechanisms and policies themselves are appropriate for the times, but for each industry, object, and policy, the policy is not necessarily appropriate for reality. Because all mechanisms are issued, not all mechanisms are appropriate for all business types and locations.

Second, to what extent do companies themselves absorb the policy by benefiting from and accessing it? This depends heavily on companies and business associations directly applying policy mechanisms.

“Companies need concrete recommendations on problems that need to be solved in reality because the government is only a ‘midwife’. All mechanisms and guidelines must emanate from the voice of companies and trade associations. “The voice of the business association is the most specific and realistic voice for government to hear and implement reforms in terms of political mechanisms,” Mr. Long said.

Mr. Doan agreed and suggested that the state bank should implement preferential lending policies for companies that have validated their reputation and brand. Strictly implement the debt freeze, debt restructuring and interest payment extension in accordance with the Government Resolution 50/CP of April 8, 2023 and Resolution 59/CP of April 23, 2023, and avoid the situation that when companies come to conduct transactions, some local bank branches are answered with the reply that they were not instructed and guided by the head office. Therefore, there is a need to strengthen the management and supervision of the commercial banking system in the communities.

“If local state banks relax their management, it will create loopholes for commercial banks to buy time on purpose, make it harder for companies to capitalize on it, and push companies to move from the credit group to the bad group, with a high risk of bankruptcy,” Mr. Doan warned.

The content of the article was published in Vietnam Economic Journal No. 30 – 2023, published on July 24, 2023. Readers are welcome to read it here:

https://postenp.phaha.vn/chi-tiet-toa-soan/tap-chi-king-te-viet-nam