Businesses scaling down investments that need huge capital

Restructuring capital, to focus on the key business fields, choosing to provide services that need less capital and cutting down financial investments are what many enterprises are doing to survive in a time high inflation, fluctuating exchange rates and difficulties mobilizing capital.

Ta Phuoc Dat, Deputy General Director of the Saigon General Service Company SVC, said in 2011, SVC will focus on trade, while it will restrain investments in the finance and real estate sectors.

Regarding real estate investments, Dat said that he will cancel big projects to gather strength for the projects that just need some additional capital. Regarding financial investments, the company began cutting down financial investments in 2010 and it will continue taking back capital to focus on its key business field – trade services.

When asked about the business plan for 2011, Dat said his company has drawn up different scenarios to be submitted to the board of directors. In general, the company is striving to have the same business result as it obtained in 2010 (in 2010, SVC had the total turnover of 4.184 trillion dong and the pretax profit of 110.768 billion dong).

While discussing the development strategy for the period of 2011-2015, after reviewing the current operational scheme, the board of directors of PetroVietnam Finance Corporation (PVFC) has decided to restructure the corporation and subsidiaries. Nguyen Thien Bao, General Director of PVFC, stressed at the shareholders’ meeting held several days ago that in 2011, the national economy is predicted to face many difficulties. Therefore, PVFC will focus on heightening the quality of its assets, capital sources and financial services in order to ensure safe and sustainable growth. PVFC strives to obtain the total turnover of 6800 billion dong and the minimum pretax profit of 800 billion dong.

Once an enterprise operating in the petroleum sector, several years ago Comeco began diversifying its business fields in order to optimize profits by pouring money into securities investments and real estate projects. The new business fields once brought huge profits to the company when the stock market was very active. However, financial investments have proven to be a risky investment, evident from when the stock market fell in 2010. Therefore, Comeco has decided to focus on developing the petroleum sale network in 2011 and restraining financial investments in order to maintain stable profits.

In order to turn objectives into reality, Comeco has set up three more petroleum shops, built a general petroleum store in Nhon Trach district in Dong Nai province which covers an area of 20 hectares (in the first phase of operation, the store has the capacity of 40,400 cubic meters) and a 25,000 DWT wharf.

Similarly, Thu Duc Import-Export Trade Company TMC has also said it will focus on trading fuel and input materials, which is the main source of income for the company; it will not spread money into too many business fields. In 2011, TMC hopes to obtain the total turnover of 1.650 trillion dong and the pretax profit of 26 billion dong and it plans to pay the dividend of 16 percent.

Focusing on core business fields is also the choice of securities companies. Pham Minh Tuan, Member of the Board of Directors of SME Securities Company, said in 2011, SME will concentrate on two main services, consultancy and brokerage. Meanwhile, it will restrict securities trading deals in order to ensure the safety of its capital. Especially, many securities companies tend to abandon the service of guaranteeing businesses’ share issues, which was once considered a profitable business field. It is because the service requires a huge sum of capital and the risks are big. – Vietnamnet

Tags: doing business in Vietnam, Vietnam business