Sharing at the seminar "Macroeconomic stability and corporate bond market development" organized by the Government Electronic Information Portal on the afternoon of May 28, Deputy Minister of Planning and Investment Tran Quoc Phuong said that in the past, we have also witnessed times when we had to suffer the consequences of high inflation such as in the 80s and 90s of the last century or the period of 2008 - 2011 due to the world economic crisis.
Guests attending the discussion on the afternoon of May 28
According to Mr. Phuong, it will take a lot of time and resources to overcome the consequences, as well as return to a state of good economic development. The consequences are very serious, with reduced growth, even recession, and the lives of the people being greatly affected, followed by unemployment, poverty, and even the destruction of environmental resources.
"People understand that inflation hits their family's rice pot and their wallet. Therefore, they are very concerned about how to control inflation, because once inflation increases, life is turned upside down, spending and expenses increase a lot and will affect their lives," said the Deputy Minister of Planning and Investment.
Although the results of inflation control in recent times are noteworthy, especially in the price control policy, according to Mr. Phuong, "there are still public opinions that with such good results, is it because of our data story?"
From the perspective of the leader of the Ministry of Planning and Investment with its affiliated agency, the General Statistics Office, Mr. Phuong affirmed that "the calculated and published data on Vietnam's inflation index are completely reliable and internationally recognized."
"A weak body cannot be restored with tonics"
Assessing the recent inflation control as good, however, according to Prof. Dr. Hoang Van Cuong, Vice Principal of the National Economics University, attention to inflation control must go hand in hand with limiting resources pumped into the market, such as currency.
"If we are too concerned about inflation, continue to tighten the currency, and limit capital supply for businesses, businesses will not have the resources to produce and do business. Obviously, the pressure of world inflation on Vietnam is low, but the pressure of recession is higher and more worrying. If we do not act soon, wait until the recession and then pump money into the rescue, it will be difficult to recover. If the "body" is too weak, adding supplements will not restore it."
Mr. Cuong also cited data from a newspaper survey of 10,000 businesses, showing that the rate of businesses facing difficulties and having to cut their workforce was over 80%, about 20% had to cut their workforce by half, and over 50% were in dire need of capital support. The market is difficult, and capital is stagnant if products cannot be sold.
This expert recommends that waiting for recovery before production is "slow", and must calculate "lessons" in advance to respond. This is the period when businesses must increase resources, based on two sources: bonds and bank loans. However, in early 2022, when some businesses fell into legal crisis, many investors realized the risks of the bond market, causing corporate bonds to fall into difficulty.
Sharing this perspective, Deputy Minister of Finance Nguyen Duc Chi said that the corporate bond market began to develop strongly from 2019 to the first months of 2022 and quickly reached a scale of nearly 1.2 million billion VND (according to the balance as of December 31, 2022). However, from the second half of 2022 until recently, this market has encountered many difficulties, due to many different reasons.
Deputy Minister of Finance Nguyen Duc Chi
What is the solution for the bond market to recover safely?
The Deputy Minister of Finance also said that, in addition to the most important factor of macroeconomic stability, there must be legal regulations directly related to the bond market. In a very short time, the Government issued two Decrees No. 65/2022/ND-CP and No. 08/2023/ND-CP.
The latest legal regulations have promptly helped issuers and investors have the conditions and legal tools, and have time to solve immediate difficulties in cash flow, liquidity, collateral, and solve other related problems... Removing difficulties in the real estate market also helps support the corporate bond market to continue to stabilize and develop sustainably.
"The Government's message is very clear that economic relations should not be criminalized. Enterprises must respect the agreements between the issuing enterprise and investors in accordance with the law and must fulfill their responsibilities. The State ensures that this is done," said Mr. Chi.
According to the Deputy Minister of Finance, after Decree 08 was issued on March 5, 15 enterprises issued VND26,400 billion worth of corporate bonds to the market. Meanwhile, at the end of 2022 and the first two months of 2023, almost no enterprises were able to issue. "This is a positive sign showing that the policy impact helps businesses and investors regain confidence and start returning to the market," said Mr. Chi.
In addition, after Decree 08, 16 enterprises have negotiated with investors to resolve the total value of bonds worth nearly 8,000 billion VND such as Novaland, Hoang Anh Gia Lai, Hung Thinh Land...
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