Vietnam has paid an expensive price for its macro-economic achievements in 2013.
A senior economic expert from Quang Ninh province’s Investment Promotion Agency told VIR that the government’s macro-economic stabilisation efforts in 2013 “had taken a heavy toll on local production with an unheard-of number of enterprises suspending operations and into falling into dissolution.”
“We can celebrate a 5.42 per cent growth rate and inflation of 6.04 per cent, but if the government does not now take measures to spur production, many more enterprises may die in 2014,” he warned.
The General Statistics Office reported that over 60,700 enterprises either halted their operations or went bankrupt in 2013, up 11.9 per cent on-year.
“This is a massive number reflecting that the health of the economy is weak and competitiveness is fragile. It is also the corollary effect of the government’s ineffective pro-production measures over the past several years,” the expert said.
According to a Chamber of Commerce and Industry (VCCI) business survey conducted in December last year of 700 enterprises across Vietnam, 42 per cent said they didn’t highly value the government’s existing measures on inventory reduction, market and investment support, and property market development because measures were unclear and ineffective.
As an example, of the government’s VND30 trillion ($1.43 billion) bailout to revitalise the floundering property market, only 1.6 per cent has thus far been disbursed. It started six months ago.
The survey also showed that 8 per cent of respondents had to suspend their operations in 2013, due to a drop in demand and available capital.
After 10 years operating, Hanoi’s own Export-Import Nhat Anh Company officially declared bankruptcy last week. Company director Nguyen Thuyen said “We cannot keep our operations going amid these difficulties, and some 200 workers are now without a job.”
If local production continues to weaken, the impetus behind long-term economic growth will fail. Many local enterprises have been left with little or nothing to keep them going just so macro-economic targets could be reached,” said Vietnam Small and Medium-sized Enterprises Association chairman Cao Sy Kiem.
But on the other side, the General Statistics Office reported that the number of newly-established enterprises in 2013 totalled nearly 77,000, up 10.1 per cent on-year, though with total registered capital down 14.7 per cent on-year to around $19 billion.
“While the number of new enterprises has gone up, they aren’t making any contribution to economic growth, as nearly all won’t have achieved a profit in such a short time and will be depending on bank loans. Therefore, if lending conditions don’t improve, not only old enterprises, but these new ones as well will be facing bankruptcy,” argued Le Xuan Ba, former head of the MPI’s Central Institute for Economic Management.
Prime Minister Nguyen Tan Dung has ordered the State Bank to determine appropriate measures to solve bad debts and better facilitate bank lending in 2014.
“Enterprises’ difficulties must be solved in 2014 so we can achieve the GDP target of 5.8 per cent, a foundation for growth of 6 per cent or beyond for 2015,” Dung affirmed.
Source: http://www.vir.com.vn