The Chairman of Phu Thai Group Businesses must take one step back to advance two steps

DNHN - Pham Dinh Doan, chairman of the Phu Thai Group, emphasized that businesses must take one step back to take two steps forward, i.e., they must slow the development process and prepare for expansion.

Mr. Pham Dinh Doan, chairman of Phu Thai Group, shared with Enterprise & Integration Magazine that in 2023, businesses will face many challenges, even well-functioning ones. This is the problem caused by the decline in market demand; the demand for all essential goods has decreased. This year, consumer demand fell by up to 20%, while some businesses made growth plans. Due to this reversal, the amount of inventory in the warehouses of businesses is very high; therefore, it is necessary to survey to comprehend the difficulties of businesses, particularly the amount of inventory. When inventory levels are high, additional costs will be incurred, which will impede business results in 2023. In addition, transportation costs, raw material prices, and capital are all experiencing difficulties, not just at the start of the year but throughout the remainder of the year as well. Enterprises are attempting to restructure themselves to avoid impending problems that could become so severe that their demise is imminent.

Not only on the domestic market but also on the international market, businesses struggle to find stable production solutions. For the international market, the crises precipitated a significant decline in foreign orders. Due to the closure of businesses and the increase in the unemployment rate, domestic consumers are also more prudent and are saving more.

As costs rise, individuals and businesses reduce their spending, resulting in an abundance of inventory among businesses. While businesses require three, six, or twelve months to resolve their inventory issues.

To solve problems, it is crucial to engage in conversations with various industries and business types. The current government is unable to provide a comprehensive economic solution.

Each business community must convene, share information, and propose short- and medium-term solutions to exit this difficult period. At the same time, assist the business community in planning long-term activities for the next three or four years alongside the government.

"The business community is exhausted, including management issues, due to the inability to construct and forecast the market accurately. Mr. Doan stated that additional support from the government is required.

Relating capital difficulties, the Chairman of Phu Thai Group stated that a reduction in interest rates is beneficial for businesses, but that the issue at hand is that businesses lack capital due to excessive inventory, which cannot be resolved. The capital flow back to work ceases to exist.

Businesses want to borrow money from banks, but the bank must now evaluate the business plan thoroughly. While the enterprise's current business plan is not optimal, given that the price of imported goods on foreign markets has increased by 10-30%, the price of domestic goods has also increased. Additionally, difficult businesses exert pressure on one another to generate profits as anticipated at the start of the year.

Businesses are under pressure to fail to meet their annual business objectives. For businesses to access and mobilize capital during this challenging period, credit institutions must take them into account.

"Businesses must take a step back to take two steps forward, that is, they must slow down the development process by setting a short-term goal for 2023 to prepare for the next development. Mr. Doan emphasized that setting development or expansion goals for this year is not necessarily appropriate.

Concurrently, the Chairman of Phu Thai Group stated that 2023 will be a challenging year for the business sector. After a year of restructuring, hopefully, businesses with calculated good structure will resume growth at the start of 2024.

Hoai Anh