Capital Economic Forum brings good news to the business community

DNHN - Unquestionably, businesses face numerous obstacles, particularly in terms of commodity consumption markets and capital sources. At the Capital Economic Forum 2023, all units demonstrated a strong resolve to assist businesses in overcoming this period

Consider the "heart" of the enterprise.

On April 21, 2023, at the Capital Economic Forum 2023 hosted by the Association of Small and Medium Enterprises in Hanoi, Mr. Mac Quoc Anh - Vice Chairman, General Secretary of the Association of Small and Medium Enterprises in Hanoi City presented an overview of the current state of enterprises over the past few years.

Consequently, the majority of domestic businesses are small and medium-sized, with limited raw material initiative. Currently, businesses continue to face numerous obstacles, particularly in the domestic and export consumption markets. Moreover, enterprises continue to have difficulty gaining access to credit capital, the interest rates on bank loans to support production remains high, and the loan application process is cumbersome.

In addition, according to Mr. Mac Quoc Anh, the international market's purchasing power has decreased as a result of inflation in many countries; thus, a tightening of monetary policy may affect the economic recovery and forecast the possibility of a global recession. will occur in 2023; Supply chain disruptions are anticipated to continue, reducing economic - investment - trade activity recovery following COVID-19. The recovery of global economic growth will be negatively impacted by the high prices of essential goods, creating difficulties for the global economy and trade in general, including the import and export activities of the City. city.

Mr. Pham Hong Viet - Chairman of Hanoi Leather and Footwear Association and Chairman of the Board of Directors of Hanoi Rubber Joint Stock Company - spoke at the Forum about the current state of the leather and footwear industry, stating, "It can be said that it has never been. The enterprises of the Hanoi Leather and Footwear Association are experiencing difficulties at this time".

Specifically, beginning in July 2022, the export market began to decline as foreign partners began to reduce orders at some businesses. Comparing the fourth quarter of 2022 to the same period in the previous year, the average level of order reduction was between 30 and 50 percent. In the first three months of 2023, there was a significant decline in the volume of orders, with 50 to 70 percent of businesses reporting no export orders.

When the export market encountered numerous challenges, businesses shifted production to the domestic market. After a long period of focusing on the export market, several large companies, including Thuong Dinh Shoes, Thang Long, Harco, X26, Ngoc Ha Shoes, Ha Tay Textile Chemicals, and Viet Anh Shoes, have returned to the market. Domestic schools face numerous challenges. Domestic demand began to decline in the first quarter of 2023, particularly during the Lunar New Year, resulting in a sharp decline in domestic consumption.

According to Mr. Pham Hong Viet, beginning in the fourth quarter of 2022, businesses began to reduce the working time (a working week from 4-5 days) and production scale (cutting production lines) in response to the aforementioned situation. Last Lunar New Year, the majority of businesses took a long holiday (from 15 days or more), with some taking an entire month off. Sadder still, businesses have slashed wages and Tet bonuses, and some do not offer Tet bonuses at all. In the first three months of the year, it was common for businesses to lay off 30 to 50 percent of their workforce; units must scale back production and liquidate assets.

Mr. Hoang Ngoc Linh, chairman of the Association of Small and Medium Enterprises in the district of Phuc Tho, shared the same concern as the business community when he stated that the restructuring of production and business units in suburban areas is robust. There is a close connection between the units, which makes the price reasonable. Nevertheless, the farmer is now a manager and must know about finance, risk management, and legal management.

"Our difficulty is ensuring that our tax policy complies with the law. A capital management strategy must exist so that risks are minimal. In addition, the backlog of inventory causes businesses to lack production capital and be unable to pay bank debt and interest. Before waiting for the State to save, businesses must, in my opinion, save themselves."

Mr. Hoang Ngoc Linh provided several situational solutions, including good cash flow management, rapid cash turnover, rapid capital accounting; increased risk management; and how to facilitate access between credit sources and businesses.

Numerous positives for businesses

Before the proposal of the Chairman of the Hanoi Leather and Footwear Association to organize a promotion delegation to access new markets, Mr. Bui Duy Quang - Deputy Director of the Hanoi Tourism and Trade Investment Promotion Center stated, "To increase the consumption of goods on domestic and international markets, trade promotion is crucial." To expand the market, businesses should participate in trade promotion programs and domestic and international trade fairs and exhibitions.

"We must develop solutions for small and medium-sized businesses to access domestic and international markets through Hanoi's Trade Promotion Program. To participate in a country's trade promotion program. In addition, businesses must sometimes spend hundreds of millions of dollars. However, in its capacity as a business support organization, the Center will assist businesses at minimal expense. It is the accompanying effort to businesses."

Mr. Nguyen Minh Tuan, Director of the State Bank of Vietnam - Hanoi Branch, stated that the lack of capital is what banks are always concerned about in the difficulties of businesses. The objective of banks is to assist businesses with production and economic recovery. However, businesses must also improve themselves to meet capital access criteria based on transparency. The State Bank has lowered interest rates twice, but it remains dissatisfied with the current state of affairs. According to the directive, the bank was required to immediately reduce the lending interest rate, but was unable to reduce the deposit interest rate, causing additional difficulties for the institution.

"Mr. Tuan informed the Conference at the beginning of the year that 22 very large real estate companies had previously only invited them to become customers, but now they actively approach to accompany them, demonstrating that businesses also require support."

Notably, the Director of the Hanoi branch of the State Bank of Vietnam stated that a dialogue conference between banks and businesses will take place by the end of June or as late as July. Specifically, a draft of a new Circular regarding the restructuring of the repayment term (1-year debt relief) is being circulated to ministries and branches for their feedback. This Circular should be distributed in May. Numerous resources are being poured into the business community to overcome this challenging period.

Ha Linh