Thousands of businesses reportedly need urgent support

A series of drastic measures have been taken to prevent businesses from going dissolved or bankrupted. The tax incentives initiated by the Ministry of Finance are believed to be very useful.

The overly high bank loan interest rates, the fluctuating input material prices and the narrowed markets all have put thousands of enterprises into big difficulties.

40 percent of businesses under trying conditions

Vu Tien Loc, Chair of the Vietnam Chamber of Commerce and Industry (VCCI), said that by the end of June, only 60 percent of the total 580,000 registered businesses had been operational, while the other 40 percent had stopped operation or had been following the procedures to have their businesses dissolved.

The number of businesses which have fallen into the situation in the first six months of the year is double that of the same period of the last year, even though the national economy has become better than the difficult period 2008-2009.

According to Dr Cao Sy Kiem, Chair of the Vietnam Small and Medium Enterprises’ Association, only 30 percent of the total 22,000 member companies of the association can stay firm and develop, while 30 percent of businesses have been full of hardships, and the other 40 percent of businesses have been avoiding active service which may go bankrupted.

In fact, a lot of businesses have fallen into big difficulties, but they have not followed the procedures to go bankrupted because of the complicated procedures. Many businesses decide not to declare bankruptcy, because they fear it would be difficult to set up business again.

Regarding craft villages, it is estimated that 30 percent of member companies, mostly the ones that make products for export, have to scale down their production.

Vu Quoc Tuan, Chair of the Vietnam Craft Village Association, said that the bank loan interest rates are too high, and the input material prices have been increasing sharply, while producers cannot raise the export prices. As a result, enterprises do not accept orders.

Meanwhile, the demand from the markets in the world has been decreasing. Only the enterprises which make bamboo and wooden products have better business thanks to the high demand on the domestic market.

In Can Tho, 58 enterprises have declared the dissolution. In Da Nang City, 87 enterprises with the investment capital of 162 billion dong are following procedures to get dissolved. In Quang Tri, 18 businesses have filed for dissolution, while in Quang Nam, 16 businesses have declared the dissolution due to bad business.

Businesses need urgent support

Minister of finance Vu Van Ninh has submitted to the government the solutions on exempting tax and delaying tax payment in order to help businesses ease difficulties. The suggested solutions reached a consensus at the latest government’s regular meeting in June and will be submitted to the National Assembly for ratification at the upcoming session to be held on July 21.

The tax exemption and tax payment delay are expected to be implemented from August 11 to the end of 2011.

The Ministry of Finance has proposed to allow small and medium enterprises (SMEs) and the enterprises, which use high numbers of workers (more than 300) to delay the 2011 corporate income tax payment for one year. It is estimated that the total tax sum of SMEs is about seven trillion dong, and if counting on the tax sum of the enterprises with many workers, the figure would be 10,000-13,000 billion dong.

MOF has also proposed to reduce 30 percent of corporate income tax for the businesses which enjoy the tax payment delay, estimated at 2500-3700 billion dong in total.

According to Kiem, one month ago, his association sent a dispatch to the Communist Party’s Secretary Board and Prime Minister, asking to take measures to help businesses ease their difficulties. He said the association would gather member companies once again soon to make further proposals to competent authorities.

In HCM City, the city’s young entrepreneurs’ association is gathering opinions from member companies to submit proposals for support to the city’s leaders.

Tags: Vietnam business