The importance of flexible credit policies for textile enterprises

DNHN - The textile industry faces challenges such as importing raw materials, price fluctuations, and fierce competition. Therefore, flexible credit policies play a crucial role in ensuring the survival of textile enterprises.

The textile industry is large in scale and requires substantial initial capital investment. Consequently, textile enterprises often struggle to secure sufficient funding to meet production needs and expand business operations. Flexible credit policies can provide financial solutions, such as low-interest loans and flexible lending terms, helping textile businesses effectively address financial issues.

Currently, the textile industry is highly volatile, influenced by factors such as weather, export markets, customer demands, and changing fashion trends. Flexible credit policies enable textile enterprises to quickly adapt to these changes by providing short-term or long-term loans, depending on business conditions and production needs. This helps textile businesses maintain flexibility and respond promptly to market changes.

To compete in the increasingly fierce textile market, businesses need to invest in advanced technology and improve production efficiency. However, such investments require significant capital and usually take a long time to recoup. Flexible credit policies can provide financial support for textile enterprises to invest in new technology, purchase modern machinery, and train personnel, thereby enhancing productivity and improving production efficiency.

Exports play a vital role in the textile industry. Flexible credit policies can help textile enterprises expand export activities by providing financial packages that support access to new markets, building partnerships, and promoting brand awareness. This not only helps increase export sales but also ensures market diversification, reducing risks when a market is affected by economic or political fluctuations.

Many SMEs significantly contribute to the development of the textile industry. Flexible credit policies can facilitate better access to capital for SMEs to invest and expand production. This contributes to fostering competition and diversification in the textile industry.

According to experts, flexible credit policies are crucial in supporting the development and ensuring the survival of textile enterprises. They help address financial issues, adapt to market fluctuations, invest in technology and enhance productivity, expand export markets, and create favorable conditions for SMEs. These flexible credit measures will positively contribute to the sustainable development of the textile industry in the future.

Mr. Pham Xuan Hong, Chairman of the Ho Chi Minh City Association of Garment - Textile - Embroidery - Knitting, noted that export orders in the textile industry have shown positive signs recently. Many large enterprises have orders until the end of Q3 2024. Although the number of orders is still limited and prices are not high, the situation has significantly improved compared to 2023.

On the other hand, Mr. Le Tien Truong, Chairman of the Board of Directors of Vietnam Textile and Garment Group, analyzed that accessing loans is challenging due to the poor business performance of textile enterprises, especially yarn companies, in 2023. As a result, commercial banks are finding it harder to provide loans compared to previous years.

Therefore, the trend of credit provision in 2024 is decreasing compared to 2023. Particularly, the lending limit for the yarn sector is approved at a rate about 20% lower than in 2023, making it difficult for businesses to import raw materials and organize production when the market becomes more vibrant.

Mr. Le Tien Truong emphasized that without specific policies to support enterprises, especially in the yarn sector, the opportunity for industry recovery might be missed. The contraction in yarn production could create further difficulties, and the chance to recover what was lost in 2023 will become even more distant.

Nhan Ha