To support businesses to recover after the pandemic, agencies from the central to provincial levels have issued many decisions, directives, mechanisms and policies. However, if these support policies remain only on TV and newspapers and have not been put into practice, businesses will continue to be stuck in prolonged difficulties.
Construction material production at Thanh Tam Production and Import-Export Company Limited (Hoang Long Industrial Park, Thanh Hoa City). Photo: Minh Hang
Struggling with credit offers
With many years of prestige and experience in the market of school and household furniture, Hong Duc Educational Equipment Joint Stock Company (Le Mon Industrial Park, Thanh Hoa City) could not avoid the common difficulties of the market with revenue decreasing by about 30% in 2023. In this context, the enterprise is still accessing bank loans with quite high interest rates, with loans up to 10.5% and only reduced to 9% in November 2023. In addition to receiving a "drop by drop" interest rate reduction when directly working and proposing to the bank after the interest rate management periods of the State Bank, this enterprise has not yet absorbed any specific interest rate support policies. According to the enterprise representative, the banks also seem not to be interested in guiding enterprises to benefit from the policy. Is it possible that not only enterprises but also banks themselves are hesitant and concerned about complying with regulations on procedures, documents as well as post-inspection work?
It can be said that in the past 2 years, monetary policy has been one of the policies that the State has focused on and directed strongly. Many banks have also actively launched preferential credit packages to "save" businesses. However, the story of banks having excess money but businesses being "hungry" for capital is a problem that is causing "headaches" for managers. According to data from the State Bank - Thanh Hoa Branch, the whole province currently has 27,000 businesses but only 4,686 businesses have credit relationships with banks. Thus, only 17.3% of businesses are absorbing capital at the present time, reflecting a weak "picture" of cash flow in production and business. In addition, with outstanding debt of VND 52,130 billion for 4,686 corporate customers, the number of customers with debt restructuring in 2023 is only 266 customers with the debt restructuring value of VND 1,274 billion, which is too small a number.
Mr. Nguyen Van Thanh, Chairman of Thanh Hoa City Business Association frankly expressed his opinion: “Although the current interest rate has decreased, it is still high and beyond the tolerance of enterprises as well as the profits that can be achieved in production and business. In particular, the valuation of collateral assets is not close to the market price, causing banks and enterprises to not find a common voice.”
In particular, to support enterprises, cooperatives, and individual households to restore production and business activities, many interest rate support packages from the State budget have been issued, but most of them are "stuck" in output. Typically, the interest rate support package of 2%/year from the State budget through commercial banks according to Decree 31/2022/ND-CP of the Government is up to 40,000 billion VND. However, after nearly 2 years of implementation, the whole country has only disbursed 1,400 billion VND (equivalent to 3.5%).
In Thanh Hoa, according to data from the State Bank - Thanh Hoa Branch, after more than 19 months of implementing this policy (from May 20, 2022 to December 31, 2023), Thanh Hoa only had 208 customers accessing the interest rate support package with outstanding loans of VND 1,343 billion and supported interest of VND 17.5 billion. This number, compared to the actual capital needs of enterprises, cooperatives and business households in the province, is still too low and has not met expectations when deploying and implementing the program.
Mr. Cao Tien Doan, Chairman of Thanh Hoa Business Association, said: “The reason why businesses find it difficult to access this policy is because it comes with too many conditions that are not suitable for businesses. In particular, both banks and businesses are very hesitant to implement the policy due to confusion in determining the criteria for “businesses with the ability to recover”?
The business community hopes that in the coming time, the State Bank will be more closely involved, issue documents to guide, direct and supervise the local commercial banking system to strictly implement debt deferral, deferral, and interest payment extension in accordance with the Government's spirit. Along with that, the Government needs to boldly have breakthrough solutions, remove "bottlenecks" and issue truly feasible policies in supporting capital sources and overcoming the situation of slow implementation of support policies as in the recent past.
Many policies are still on... "paper"
It is considered a locality with strong directions to create an open corridor as well as a variety of policies to support businesses. However, most of the support policies have not yet achieved the desired results.
Implementing Decree 12/2023/ND-CP dated April 14, 2023 of the Government, in 2023, Thanh Hoa province extended the payment of value added tax, corporate income tax, personal income tax and land rent by VND 1,227.8 billion; of which, extended the payment of value added tax by VND 622 billion for 1,602 enterprises; extended corporate income tax by VND 548 billion for 1,489 enterprises; extended the payment of land rent by VND 57.8 billion for 395 enterprises. Along with that, implemented the policy of exempting and reducing land tax and water surface rent by VND 360 billion; deferred tax debt for 1,163 enterprises with an amount of more than VND 98 billion; cleared tax debt for 983 enterprises with an amount of more than VND 35.7 billion. |
Typically, Resolution No. 214/2022/NQ-HDND, dated April 13, 2022 of the Provincial People's Council (Resolution 214) on promulgating policies to support business development in Thanh Hoa province for the period 2022-2026 with 7 policies to support businesses: Support funding for training on knowledge about business start-up and business management; support funding for delivering results of administrative procedures on business registration; support funding for using digital signatures; support for connecting, sharing information, promoting and introducing products of businesses on the digital platform of Thanh Hoa province's State administrative agencies; support funding for consulting on digital transformation and applying digital technology; support businesses to expand their markets for goods consumption; support in-depth consulting for export enterprises to access new export markets. However, after 2 years of implementation, practical policies to encourage, increase confidence and support business recovery have not been disbursed.
In 2023, the policy to support enterprises under Resolution 214 allocated nearly 15 billion VND in capital; of which 2.5 billion VND supports specialized consulting for export enterprises to access new export markets; 3.5 billion VND supports the use of digital signatures; more than 2.4 billion VND supports funding for consulting on digital transformation and application of digital technology; more than 2.7 billion VND for training on knowledge about starting a business; more than 2.9 billion VND for training on knowledge about business management; 550 million VND to support enterprises in expanding their markets for goods consumption; 268 million VND to support the delivery of results of administrative procedures for business registration and 90 million VND to print and provide free handbooks on procedures for business registration, the process of registering businesses online and some policies to support businesses.
However, according to the data published by the Steering Committee for Enterprise Development, in addition to supporting 77 training courses on business start-up knowledge and 77 training courses on business administration knowledge, achieving 100% of the plan, along with some non-essential contents such as: a handbook on business registration procedures, free support for delivery of administrative procedure results..., some policies are not feasible to implement; especially policies such as in-depth consulting support for export enterprises to access new export markets, policies to support enterprises to expand their consumption markets; policies to support funding for digital transformation consulting and application of digital technology... after 2 years of implementation, there are still no enterprises registered or eligible to benefit.
According to the Department of Industry and Trade, from 2022 to now and also coinciding with the implementation of the policy is also the most difficult period of export activities. New markets such as the US, EU... are the main markets of enterprises in the province, but they are also the markets that are being affected by severe inflation, causing orders to be cut, not to mention opening new ones. In the current difficult context, many enterprises are also trying to diversify their markets to some Asian countries, but mainly small orders. Therefore, in the past 2 years, no enterprises have registered to benefit from this policy.
Along with that, businesses also commented that the conditions for enjoying the policy are not easy when businesses must meet the minimum order turnover of 300,000 USD.
Regarding the content of supporting enterprises to expand the market for goods consumption; supporting funding for digital transformation and applying digital technology, according to the Department of Finance, the reason for the difficulty in disbursement is due to the subjects and support procedures as prescribed in Decree No. 80/2021/ND-CP dated August 26, 2021 of the Government detailing and guiding the implementation of a number of articles of the Law on Support for Small and Medium Enterprises. However, currently the Ministry of Finance has not issued a document guiding the mechanism for using the State budget for regular expenditures to support small and medium enterprises according to the provisions of the Decree, so the assigned units have not had a basis for implementation.
Another ineffective business support policy is the policy to encourage the development of industry and handicrafts in Thanh Hoa province for the period 2022-2026, issued under Resolution 121/2021/NQ-HDND. The highlight of this policy is that businesses are supported with one-time funding to invest in site clearance and construction of technical infrastructure works serving industrial park activities with a budget of 1 billion VND/ha for districts 30a; 0.7 billion VND for the remaining mountainous districts and 0.5 billion VND/ha for plain and coastal districts. After 3 years of implementation, the policy has yet to find a beneficiary.
The reason why the policy cannot be disbursed is because it does not meet the condition that "the project has been put into production on the area that has been leased by the State". In fact, with the current overlapping legal procedures in investment as well as difficulties in site clearance, it takes a very long time for enterprises to complete construction procedures and put the project into operation. Even when the policy expires... the project may not be eligible for benefits. After 3 years without any new beneficiaries, the feasibility is not there and the Department of Finance is proposing to consider stopping the implementation of this policy.
According to the Vietnam Federation of Commerce and Industry - Thanh Hoa - Ninh Binh Branch, poor "health" is the most important reason why businesses cannot qualify to enjoy the policy. Along with that, it cannot be ruled out that the reason is that the communication and implementation of the policy is still superficial, mainly integrated through conferences. Therefore, businesses are still very "vague" when they hear about it and if they want to enjoy it, they do not know where to start investing?
Ms. Nguyen Thi Mai, Director of Sao Mai Import-Export and Trading Joint Stock Company (Thanh Hoa City) commented: “Currently, most of the policies supporting businesses are still on “paper”, businesses are almost unable to access them. Policies are created to be applied but in reality, they are only issued to the offices of departments, branches and sectors, and the subjects applying the policies often do not know about the existence of the policies. Or even if they know, they do not know how to access them?
Mr. Nguyen Huu Minh, Director of Vietnam Agricultural and Medicinal Materials Development Joint Stock Company (Thach Thanh), shared: “There is a need to invest and innovate medicinal material production technology to increase the value of the raw material area of lemongrass. In 2023, I also researched and approached policies in this field, but I was really "confused" because the policy on procedures and beneficiary records is still very complicated, the instructions are just from this decree to that circular, not to mention the sub-law documents, making us really discouraged and giving up."
Minh Hang
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