Businesses find it hard to survive amid downturn

In a time when the economy is down and lending rates skyrocket, many local businesses have no choice but to shut down or cut production and workforce despite their uttermost efforts to survive.
Binh Duong Province-based Center for textile materials and accessories and footwear under Lien Anh Co Ltd, for instance, has recently been closed as its customers — the businesses in the textile and footwear industry — are badly affected by the economic downturn.

The center, a US$12 million project established in 2009 in a bid to support the domestic textile and footwear exporters with a sustainable material supply, in fact managed to lease only a few of its 650 booths to the material and accessory suppliers.

“We have been making no profits,” Truong Thi Thuy Lien, deputy director of Lien Anh Company, told The Saigon Times Newspaper.

Lien said the center — which sells textile materials — could hardly find customers since 70 percent of the domestic textile and footwear industries still operate as outsourcing manufacturers for foreign companies and as such didn’t need to buy materials but get them from the foreign importers.

“Besides, many manufacturers have gone bankrupt due to the troubling economy, which also caused negative impacts on the operation of our center,” she added.

A textile analyst said most of the firms have to operate as outsourcing manufacturers as the soaring lending rates prevented them from accessing bank loans for buying materials.

For his part, Phung Dinh Ngo, director of Binh Hoa Textile Company, said his company’s workforce had been cut from 600 to 100 laborers amidst the economic crisis.

“We could no longer afford manufacturing for the exporting partners,” he admitted, adding domestic businesses still received inadequate supports from the government.

Many businesses working in industrial parks and export processing zones have also been forced to cut production, transfer their manufacturing facilities or even cancel their projects.

Hence, the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) said it is seeking help from investment funds to support its members with low-cost lending.

Le Anh Tuan, HEPZA’s deputy head, also said they would reduce the time needed for administrative procedure clearances in order to help the businesses stay focused on their production.

“We will try our best to help the businesses overcome difficulties,” Tuan said.

Tags: Vietnam companies, Vietnam enterprises, Vietnam SMEs