Last updated: Thursday, May 16, 2013
Support for Better Corporate GovernancePosted: Tuesday, August 14, 2012
Dr Vu Dinh Anh, an economic expert, said Vietnamese businesses are having investment opportunities and investment channels from now till the end of this year. Particularly, if deposit interest rates continue to decline from 9 percent to 7 percent in late 2012, lending rates will be likely to fall to 10 -11 percent, which is seen good for doing business.
At the seminar on “Capital source and management skills" held by the Bank Information Portal and the Vietnam Chamber of Commerce and Industry (VCCI) on August 8, 2012 in Hai Phong City, authorities and specialists provided more information and proposed solutions for businesses to widen access to capital sources and improve management skills.
Ms Nguyen Thi Hong, Director of Monetary Policy Department under the State Bank of Vietnam (SBV), said: As of August 2, 2012, only 29 percent of old loans were bearing interest rate of over 15 percent per annum after three weeks the SBV Governor sent a request ordering commercial banks to lower rates to the mentioned rate. Foreign exchange rate was told to keep within 2 percent. Interbank rates were stably maintained as low as some 2 percent per annum with a significantly improved liquidity. Banks increased investment into bonds. In the year to date, over VND110 trillion worth of bonds were sold, mostly to commercial lenders.
As regards effective capital source management and skills for businesses, Dr Dang Duc Son said many companies launched sales and promotions programmes but purchasing power did not improve. Payment capabilities weakened, loan repayment and growing imbalance in debts to equity are causing companies to lose their capital. Expressly, profit dropped, inventories increased while solvency was at an alarming rate. He noted that in the current context, payment capability is more important than profitability.
The roots of these difficulties were attributed to changes in macroeconomic policies, consequences of global economic crisis, and loans with exorbitant rates.
Banks tightened lending requirements because of growing bad debts and reduced liquidity. This resulted in a series of problems against businesses, including capital shortage, no security asset, growing inventories, increased expenses and rising cost prices. Meanwhile, banks paid less attention to profitability of borrowers but liquidity. Even, profits are not the real money but a product of accounting. The solution for troubled companies is to reproduce financial plans on quarterly, half-yearly and annual basis, boost internal control, and change strategies. For a company, three most important indicators are days for collecting debts, inventory turnover and days of repayment.
Mr Nguyen Kim Trinh, Director of Tan Binh Co., Ltd, said Current policies of the State Bank are very good and practical to help enterprises to deal with difficulties in interest rates and loans. However, due to lax management and unspecific regulations for banks, not many companies are qualified for new loans for business expansion. All businesses want to have support to expand operations, earn money to repay debts.
Dr Pham Thi Thu Hang, VCCI General Secretary, said that VCCI has submitted to the Government specific business support packages, particularly the establishment of a fund to help small and medium enterprises in trouble.