Economic stimulus package deployed by Government still make enterprises worry

Economic slowdown: challenges follow upon opportunities

Discussing with enterprises to overcome obstacles

“We are exerting all efforts to both curb inflation and prevent economic downturn. As a saying goes ‘disaster lurks within good fortune’, thus in the economy, challenges follow upon opportunities. Two advantages of Vietnamese people are optimism and flexibility in every situation, and this is also an opportunity for Vietnamese enterprises to restructure their business methods with firm steps in the integration process”, Tran Du Lich – an economic expert and Vice Leader of Ho Chi Minh City National Assembly Delegation remarked at a meeting in Dong Nai province.

Mr Tran Du Lich said that Vietnam is facing great challenges in current economic context. The sudden price hike of such three products as foods, metals and fuels has made domestic manufacturing expenses be in the increase. In 2008, though the Government succeeded in curbing inflation, the main causes of inflation and trade deficit has still existed. This situation mainly came from low economic efficiency; particularly, the incremental capital output ratio (ICOR) accounted for 4.6, investment ratio over GDP reached 38% while the economic growth rate stood at 7.6%. The added value index over the value of output sharply decline in processing industry, only accounting for 33% in 2008 (47% in 2007). This index in agriculture has been unchanged at 55% in the past years.

Enterprises were encouraged with interest rate subsidy policy of the Government

Mr Lich stated that the quality of GDP growth rate becomes worse and worse let alone other arising problems such as about environment, culture and society, etc.

  Mr Lich added: It is unlikely that a global economic crisis will occur, thus the most important thing now is to control inflation and prevent economic downturn. In 2009-2010 period, the enterprises in Dong Nai province will have opportunities to move away from the quantity to the quality though there are many difficulties waiting ahead.

Enterprises still get many worries

Enterprises have opportunities to restructure their mode of operation more effectively

  Vice-Chairman of Dong Nai Young Enterprise Association Pham Duc Binh said “The Government’s stimulus package is now considered as a ‘heart assist device’ for ‘strong enterprises’”. Therefore, is this policy is effective when it is difficult for ‘weak enterprises’ to get assess to bank loans with new interest rate support policy? The administrative reform is also a part of this package that does not require much money and gains best expectation from enterprises. “Enterprises carry out their projects most quickly within 6 months, average in 3 years, and longer period of implementation is unknown or unpredictable. Enterprises feel very tired when following such projects, thus they will enjoy many benefits if the administrative reform is deployed”, said Mr Binh.

  This package of the Government is drawing attention from many enterprises. But whether “this small cake” (the economic stimulus package) meets the demand of supplying capital source or not is a big question. Therefore, those who come first will be served first.

  Director of An Phu Thinh Joint Stock Company Vu Thanh Tuan expressed his worry: “Enterprises are encouraged with the 4-percent interest rate subsidy to overcome this difficulty. However, the problem is that this interest rate support policy needs to be quickly put into practice so that the enterprises can effectively implement their business plans in a not-very-long period of 8 months”.

  The economic stimulus package approved by the Government is expected to create the best possible conditions for businesses, especially small-and medium-sized ones.  Many measures related to this package is being urgently deployed such as: loosening credit, cutting interest rates to boost investments and consumption, tightening import, minimizing trade deficit, cutting down taxes to businesses, and stimulating market demand for both agriculture and consumption. The reality has shown that there is not a common solution for all enterprises because each enterprise has its own issues. The enterprises themselves need to made great efforts to overcome their obstacles instead of replying on the State due to the fact that the State is only a supporter. Hence, the effective business plan will be able to rescue enterprises from current difficult situation.

Reported by Nguyen Thuong, Translated by Minh Minh