Some large enterprises have had to sell assets at low values, be acquired or merged to reduce cash flow difficulties and maintain production and business, according to the Government.
The above information was stated by the Government in a report sent to the National Assembly on May 17, on the supplementary assessment of the socio-economic situation in 2022 and the situation in 2023. This content will be considered by the National Assembly at the opening session on May 22.
According to the Government, in the first four months of the year, the macro economy was stable, inflation was controlled at a reasonable level with the CPI (consumer price index) increasing by 3.84%. The State Bank has twice reduced the operating interest rate to support credit institutions in lowering loan interest rates, stabilizing exchange rates and ensuring system safety. Budget revenue in the first four months reached 39% of the estimate, domestic revenue reached 39.5% of the estimate.
However, the Government believes that the difficulties that began at the end of 2022 and lasted until the beginning of this year have caused difficulties in production and business activities of enterprises. Important drivers of growth in production, especially industrial production, exports, and FDI attraction, have all decreased.
The four-month industrial production index (IIP) decreased by 1.8% compared to the same period last year. Orders decreased and inventories tended to increase at many enterprises in key manufacturing and export industries such as seafood processing, footwear, iron and steel, cement, and construction materials.
"Enterprises lack capital, while facing high interest costs and difficult access to bank loans and capital markets," the Government acknowledged. This increases the pressure on businesses to maintain operations and production.
In addition, the pressure to mature and repay corporate bonds, especially in the real estate sector this year and 2024, is very large. Specifically, the volume of corporate bonds maturing this year is about VND284,000 billion, of which real estate accounts for 40%. In 2024, about VND363,000 billion of bonds will mature and 30% of this is real estate.
"There has been a situation where some large enterprises operating in multiple industries and fields have had to sell assets at low value, be acquired or merged to reduce cash flow difficulties and maintain production and business," according to the Government.
The fact that businesses are having difficulty selling assets was mentioned by Minister of Planning and Investment Nguyen Chi Dung at the meeting of the National Assembly Standing Committee on May 9. "Many large businesses have had to sell assets at low prices, and what they can sell is sold at half of their real value. It is worrying that the buyers are foreigners, especially for businesses that need to be kept and supported," he said.
The phenomenon of one enterprise acquiring another is theoretically a normal market rule. However, Mr. Dau Anh Tuan, Deputy General Secretary of the Vietnam Federation of Commerce and Industry (VCCI), said it would be "painful" if a good enterprise, due to short-term difficulties, was forced to sell its assets and transfer a brand that had been famous for many years.
According to VnExpress , the group with the phenomenon of "selling themselves" is mostly in the real estate and manufacturing sectors - subjects facing great difficulties in terms of legality, cash flow, and orders.
According to the Government's report, credit growth as of May 4 reached 2.87%, indicating that production and business are facing difficulties, the capital absorption capacity of enterprises and the economy continues to be difficult. The lending interest rate tends to decrease but remains high; the average lending interest rate of newly-arrived VND of commercial banks is around 9.3% per year.
Businesses are exhausted, so hundreds of thousands of workers in large industrial zones have had to reduce their working hours and lose their jobs. The Government report cited data showing that the number of workers who quit their jobs and received one-time social insurance benefits increased by more than 19% compared to the same period last year.
In the past four months, nearly 78,900 new businesses were established and returned to the market, but the number of withdrawals increased by more than 25%, with 77,000 units. That is, for every new business established and returning to the market, there is also one unit that goes bankrupt or dissolves. The Government believes that this situation may continue to become more complicated and difficult in the coming time.
Given the above situation, the Government assesses that the pressure on macroeconomic management is increasing. Production, business and investment are facing many difficulties, import and export are decreasing, which is likely to affect the budget revenue in the second quarter and this year. This will put pressure on fiscal policy management. Monetary policy management is also difficult when it is necessary to control inflation, reduce interest rates to support production and business, and ensure the safety of the credit institution system.
Presenting solutions, the Government said it will continue to operate key fiscal policies, support businesses and people to reduce input cost pressure, promote production, attract investment, disburse public investment capital, and economic recovery and development programs.
At the same time, banks need to cut costs to lower interest rates, stabilize loan interest rates and increase access to credit capital for businesses and people. The Government will issue fiscal policies, especially on taxes, fees and charges to support production and business, the economy, workers and ensure social security.
In addition, administrative reform and improvement of the investment and business environment will be promoted by all levels and sectors, especially handling problems related to fire prevention and fighting and thoroughly resolving the issue of motor vehicle inspection.
The Government also said it will promote decentralization, delegation of power, and individualization of the responsibilities of leaders in conjunction with inspection, supervision, and prevention of corruption, negativity, and waste; tighten discipline, and overcome the situation of shirking responsibility among a part of the staff and civil servants.
Source link
Comment (0)