Lending rate almost beyond enterprises’ reach: report

The organizers of the survey Vietnam Business Insight Survey announce the results at a conference in HCMC - Photo: Thu Nguyet

HCMC – Many local enterprises are taking out short-term loans with interest rate of more than 12% a year, which they say they can’t afford for a long time, according to a survey report released on Thursday.  

The Vietnam Business Insight Survey, conducted among nearly 400 enterprises in the country, shows the current interest rate of short-term loans is nearly touching the unaffordable level for many local companies. It means many of them are hardly able to burden the high rate any longer.

The survey is made every quarter by the Vietnam Chamber of Commerce and Industry (VCCI) in co-ordination with the General Statistics Office and Asia Competitiveness Institute, under the financial support of the Asia Foundation.  

In details, two-thirds of nearly 400 corporate respondents are borrowing short-term loans at an annual interest rate of more than 12%. About 60% of these enterprises say the lending rate is unreasonable, and 36% of them can’t afford the high capital cost loans in the long term.

Therefore, instead of borrowing from banks, they resort to other capital sources to support their operations and production, which negatively affects their investment strategy. According to the survey, about 94% of business respondents say under-12% lending rate is reasonable for them.  

Besides the expensive loans, the survey found many local companies are facing challenges from lack of electric power and skilled labor, and traffic congestion.  

In addition, local companies are coping with obstacles from the current business environment, said Vu Kim Hanh, vice chairwoman of Leading Business Club, at a conference to release the survey in HCMC.  

Hanh explained that they suffered fierce competition from fake, cheap and smuggled goods. Hence, some of them stopped their production and were having their products outsourced to China then labeled “Made in Vietnam” to reduce costs of the products.    

“Even some companies recognized as producers of high-quality Vietnamese products are outsourcing to China and label the goods as domestically made,” she said.  

Hanh added that local enterprises also told her that they were burdened by un-official fees but didn’t give any details. Costs for after-sales services, promotion and environment protection are challenging local producers.

The survey also shows local enterprises’ trade and production improved in the second quarter of this year compared with the first quarter.

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Lending rate almost beyond enterprises’ reach: report

The organizers of the survey Vietnam Business Insight Survey announce the results at a conference in HCMC - Photo: Thu Nguyet

HCMC – Many local enterprises are taking out short-term loans with interest rate of more than 12% a year, which they say they can’t afford for a long time, according to a survey report released on Thursday.  

The Vietnam Business Insight Survey, conducted among nearly 400 enterprises in the country, shows the current interest rate of short-term loans is nearly touching the unaffordable level for many local companies. It means many of them are hardly able to burden the high rate any longer.

The survey is made every quarter by the Vietnam Chamber of Commerce and Industry (VCCI) in co-ordination with the General Statistics Office and Asia Competitiveness Institute, under the financial support of the Asia Foundation.  

In details, two-thirds of nearly 400 corporate respondents are borrowing short-term loans at an annual interest rate of more than 12%. About 60% of these enterprises say the lending rate is unreasonable, and 36% of them can’t afford the high capital cost loans in the long term.

Therefore, instead of borrowing from banks, they resort to other capital sources to support their operations and production, which negatively affects their investment strategy. According to the survey, about 94% of business respondents say under-12% lending rate is reasonable for them.  

Besides the expensive loans, the survey found many local companies are facing challenges from lack of electric power and skilled labor, and traffic congestion.  

In addition, local companies are coping with obstacles from the current business environment, said Vu Kim Hanh, vice chairwoman of Leading Business Club, at a conference to release the survey in HCMC.  

Hanh explained that they suffered fierce competition from fake, cheap and smuggled goods. Hence, some of them stopped their production and were having their products outsourced to China then labeled “Made in Vietnam” to reduce costs of the products.    

“Even some companies recognized as producers of high-quality Vietnamese products are outsourcing to China and label the goods as domestically made,” she said.  

Hanh added that local enterprises also told her that they were burdened by un-official fees but didn’t give any details. Costs for after-sales services, promotion and environment protection are challenging local producers.

The survey also shows local enterprises’ trade and production improved in the second quarter of this year compared with the first quarter.

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Posco E&C Vietnam turns all foreign-owned

HCMC – South Korea’s Posco E&C Vietnam has announced its conversion to a wholly foreign-owned entity through the acquisition of a 30% stake from Vietnam’s engineering firm Lilama.

Posco E&C Vietnam expects the acquisition of the Lilama stake and a license from the authorities for the joint venture to turn all foreign-owned to pave the way for it to become a leading construction firm in the country.

The Korean firm can now expand business into the housing, apartment and office building market segments using its own trademark, said general director Park Si-sung.

In 1995, Posco E&C entered the Vietnamese market as the co-investor of the Diamond Plaza project in downtown HCMC. Since then, it has got involved in projects to develop factories and new urban areas, and infrastructure projects such as power plants, oil refineries, roads and sea ports.

Posco E&C has completed various projects such as installing oil tank and steel structures for Dung Quat Oil Refinery, boilers and steel structures for Ca Mau Coal Power Plant No. 1 and No. 2, steel structures at Tan Son Nhat International Airport, Posco Cold Rolling Mill in Ba Ria-Vung Tau Province, and IT College in Danang City.

The company is designing a master plan for Hanoi and investing in Ngoc Liep New Urban Area following the North An Khanh new urban area. It is also involved in the construction of Hue General Hospital, Minh Khai Building in Hanoi, Waterpark Apartment, stages 1, 2 and 3 of Noi Bai-Lao Cai Highway, and stage three of Long Thanh–Dau Giay expressway.

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VN pushes for investment cooperation with China

A Vietnamese delegation led by Minister of Planning and Investment Vo
Hong Phuc paid a working visit to China at the invitation of the
Chinese National Development and Reform Commission (NDRC) from Sept.
12-18.

The visit aims to discuss the development of
micro-economies, share experiences to surmount the adverse impacts of
the global financial crisis, promote investment and study development
plans in western China . It was also a chance for the two sides to
share information about their missions and support each other in
professional activities.

During its stay in China ,
the delegation held talks with NDRC’s Deputy Head Zhang Xiaoqiang on
Sept. 17 and made fact-finding tours of Gansu province to explore
the locality’s economic situation and visit several companies.

As of July 31 this year, China ranks 15 th out of 91 countries and
regions investing in Vietnam with 743 projects capitalised at 3.17
billion USD.

Also, Vietnam has carried out six
investment projects in China with a total registered capital of 9.7
million USD, mostly in the service area./.

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Crisis impacts on two-thirds of local SMEs

Two-thirds of the small and medium-sized enterprises (SME) in Vietnam
were affected by the global financial crisis but most of them said
these challenges were temporary.

This is the result
of a survey conducted at SMEs in 10 cities and provinces nationwide,
which was announced at a seminar held in Hanoi on Sept. 17 by the
Central Institute of Economic Management (CIEM) under the Ministry of
Planning and Investment.

Prof. Finn Tarp,
coordinator and supervisor of the survey, said the business environment
of SMEs in Vietnam seemed to worsen between 2007 and 2009, when SMEs
faced more barriers, including the falls in both demands for products
and supply of credits.

The rate of SMEs that
annually survived the crisis dropped, while a large number of other SMEs
were forced to halt operations, said the professor.

However, Tarp said super-small companies suffered fewer impacts from
the crisis than bigger enterprises, as the crisis helped improve their
business conditions, make competition less tough and push the government
to offer them better assistance programmes.

According to the survey, SMEs in Hanoi, Ho Chi Minh city and the central
province of Nghe An were hardest hit by the crisis, while those in the
provinces of Phu Tho, Khanh Hoa and Lam Dong and Hai Phong city suffered
fewer negative influences.

Almost 40 percent of the SMEs facing credit-related difficulties were in rural areas and household businesses in cities.

The survey, the sixth of its kind, was jointly carried out by CIEM,
the Institute of Labour Science and Social Affairs under the
Ministry of Labour, War Invalids and Social Affairs, and the Faculty of
Economics at Copenhagen University./.

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Vietnam, Russia plan to hold FTA negotiations

Vietnam and Russia agreed to soon begin negotiations on a bilateral
Free Trade Agreement (FTA) with the participation of the nations in the
Customs Union ( Russia , Belarus and Kazakhstan ).

The first meeting of the joint working group for the Vietnam-Russia
FTA will be held in Hanoi next month to embark on steps needed for
the negotiations.

The consensus on this issue was
reached at the 14 th meeting of the Vietnam-Russian Inter-government
Committee for Economic, Commercial, Scientific and Technological
Cooperation, which convened in Moscow from Sept. 14-17.

Minister of Industry and Trade Vu Huy Hoang, and his Russian counterpart, Viktor Khrristenko, co-chaired the meeting.

The two sides focused discussions on ways to step up cooperation in
the fields of economy, commerce, science and technology, and raise
two-way trade.

Both sides noted with pleasure that
economic and trade relations have seen progress since the 12 th
meeting. Bilateral trade reached a decade-high record of almost 1.83
billion USD in 2009, including 414.89 million USD from Vietnamese
exports.

However, the officials said economic and
trade ties remain modest, failing to reach their full potential, and
match with the excellent political relations, traditional friendship and
strategic partnership between the two countries.

Vietnam affirmed its desire to cooperate closely and effectively with
Russia in energy, with top priority given to oil and gas, and
construction of power plants and coal mining.

Other
fields that need to receive a boost include mechanical engineering,
automobile assembly, trade, finance, banking, education, training,
agriculture, science, technology, telecoms, aviation, sports, culture,
tourism and space research.

Both Hoang and
Khrristenko affirmed the two governments’ support for companies to
explore business and investment opportunities in each other’s markets.

The two sides agreed to hold the next meeting in Vietnam in 2011./.

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Samsung posts 1 billion USD in export

Samsung Electronics Vietnam (SEV) has reported an export value of 1
billion USD since April 2009 and is expected to increase the figure to
1.7 billion USD by the end of 2010, becoming Vietnam ’s largest FDI
exporter.

Addressing a ceremony held in Yen
Phong I Industrial Zone in the northern province of Bac Ninh on
Sept. 17 to mark the event, Deputy Prime Minister Hoang Trung Hai
praised the company’s performance.

The company
produces hi-tech products and has become an important part of Samsung’s
global supply chain, while employing 7,000 local workers, the Deputy PM
said.

He said he hoped that SEV would continue to invest, expand its production and employ more local workers.

He also called for more investors from the Republic of Korea
(RoK) and pledged favourable conditions for foreign investors in
Vietnam .

SEV is the RoK Samsung group’s seventh largest
mobile handset manufacturer and the first in Vietnam to provide
products to global markets.

The company’s
two production facilities produce 6 million items per month which are
exported to 52 countries, earning 200 million USD.

Chairman of Bac Ninh provincial People’s Committee Tran Van Tuy said he
hoped that SEV will contribute to making Bac Ninh a modern industrial
province by 2015./.

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