Low productivity holds back local companies

A lack of ownership capital, low productivity and bad loan management have been blamed for Vietnamese businesses’ poor performance, according to a new credit index report.

The 2011 report was compiled by the Credit Rating of Vietnam Joint Stock Company (CRV) in co-operation with the Presidential Office and the Viet Nam Chamber of Commerce and Industry (VCCI).

Inflation, high interest rates and forex fluctuation had an adverse impact on enterprises’ operations in the past months, the report said.

In particular, a lot of textile and garment companies suffered huge losses between 2002-09, though the industry had traditionally played a key role in Vietnamese exports. In 2009, the average profit of big companies fell to VND13.3 billion (US$640,000) from VND15.5 billion ($745,000) in 2000.

The footwear industry also showed low productivity, which made it less competitive with other sectors, the report said.

It stated that most Vietnamese enterprises were small- or medium-sized with capital of under VND50 billion ($2.4 million). Companies that borrowed a lot of capital in comparison with their reserves have operated less efficiently than the rest.

The report also includes a list of 596 Vietnamese businesses and 20 huge commercial banks, which have been rated following nine levels from AAA through C, based on 54 financial criteria.

It also analysed the capabilities of Vietnamese exporters and 100 large corporations, as well as their advanced technology index.

Furthermore, it also assessed the nation’s economic situation in 2010, while forecasting possible risks that could threaten sustainable development in 2011.

Doan Duy Khuong, deputy chairman of the VCCI, said the report would help enterprises recognise their positions and suggest them how to enhance their competitiveness. — VNS

Tags: Vietnam companies, Vietnam enterprises, Vietnam SMEs