SUPPORT NEEDED TO SAVE ENTERPRISES FROM EXITING MARKET

Enterprises were in dire need of support to overcome difficult times which forced many of them to sell assets at a loss or leave the market.

According to the General Statistics Office, about 77,000 enterprises exited the market in the January – April period, increasing by 25.1 per cent against the same period last year.

Minister of Planning and Investment Nguyễn Chí Dũng at the meeting of the Standing Committee of the National Assembly earlier this month said that many enterprises, even big ones, must sell most of their assets. Enterprises were in a situation where what could be sold had been sold, Dũng said, adding that many just sold for just 50 per cent of the actual value.

Dũng said enterprises were facing many difficulties. The first problem related to cash flow, he said. “There is a problem with credit management. It is released too quickly and tightened too quickly.”

He was worried that buyers of enterprises’ assets were foreign ones, which must be paid special attention to.

He also pointed out that there was a lack of accountability in ministries, agencies, and local authorities as many investment procedures took years to complete.

According to HCM City Mechanical and Electrical Enterprises Association, some companies were struggling with cash flow and drops in orders which made it impossible for them to maintain operations. Some must sell assets to foreign ones to avoid defaults while some were under negotiation for mergers and acquisitions.

According to Đậu Anh Tuấn, Deputy General Secretary of the Việt Nam Chamber of Commerce and Industry (VCCI), the health of enterprises reflected the health of the economy, thus, it was necessary to have stronger solutions to prevent the wave of enterprises selling assets and leaving the market.

Enterprises need to be provided with stronger support from the Government to overcome the difficulty caused by rising global uncertainties and a difficult domestic economic context, Tuấn said.

Regarding the phenomenon of selling assets, Tuấn said that an enterprise taking over a struggling business was a normal thing. But if a good business faced short-term liquidity problems and was forced to sell its properties or brands, this was a big problem for the economy.

In the long run, the wave of selling assets to foreign enterprises was posing a threat to the economic security, he said.

For example, the acquisitions of enterprises that were doing business with large retail chains across the country would affect the domestic distribution channel.

Enterprises were more cautious with business expansion in an uncertain world and people tended to put money in the bank, Tuấn said. If this trend continued, it would affect economic growth, job creation and budget revenue, he said, urging the Government to provide support to encourage the money to flow into production and business.

Strengthening institutional reform and simplifying administrative procedures and business prerequisites together with enhancing accountability is critical to help enterprises overcome the difficult period, he stressed.

Source: VNS