City eyes bailout for struggling firms

The HCM City People’s Committee has made several recommendations to central authorities to enable the corporate sector to overcome their difficulties and contribute to economic growth.

City officials listed the biggest problems as being a liquidity crunch, high interest rates, and forex shortage.

On Monday, at a meeting with officials from central agencies and ministries, City vice chairwoman Nguyen Thi Hong said the State Bank of Viet Nam (SBV) should increase sales of foreign currency to banks so that they have enough for the legitimate needs of businesses as well as individuals.

She also urged the Ministry of Finance to increase the income-tax threshold for individuals.

The Ministry of Industry and Trade should ensure stable power supply to manufacturing companies, she said.

The central bank has capped the dong deposit interest rate at 14 per cent.

“However, some banks still offer interest rates of 15 to 18 per cent,” she said, adding that it had resulted in unhealthy competition among the banks. Thus, banks that follow the rule were likely to suffer a liquidity shortage.”

Worse still, the high deposit rates would push lending interest rates, which were already at 18 to 22 per cent, even higher, she warned.

Huynh Van Minh, chairman of the Enterprises Association, confirmed that the shortage of funds and high interest rates were the biggest worries for companies now.

The SBV’s HCM City branch has said the demand for funds was now greater than supply, which was putting pressure on banks to hike interest rates.

State Bank Governor Nguyen Van Giau said, however, that banks must continue to comply with interest-rate regulations, failing meant they would lose their licences.

He also urged them to revamp lending plans to ensure credit growth is under 20 per cent this year, and channel credit into manufacturing and trading, agriculture, and small firms.

Deputy Minister of Industry and Trade Nguyen Thanh Bien spoke about power supply for production, saying his ministry already has a plan for the dry season.

There would be no power cuts in HCM City in April, he promised.

To support small- and medium-sized firms, the Government has allowed them to defer their income tax payments by a year, Deputy Minister of Finance Do Hoang Anh Tuan said. —VNS

Tags: Vietnam companies, Vietnam enterprises