The Private Sector Development Research Board (IV Board) has recently submitted a report on private firms' post-pandemic woes to the Government, calling for favourable policies.
Accordingly to the board, private firms are in urgent need of governmental support after two years of pandemic.
Many firms find themselves in dire situations since they have to service bank loans and incur high overhead costs while having insufficient working capital to keep running.
Mounting input costs, coupled with falling demand overseas and supply chain disruptions, fuel the situation by further eroding their profitability.
The appreciation of Vietnamese dong against other currencies, such as the yen or euro, adds to their woes by putting Vietnamese exports at a disadvantage.
Meanwhile, bank loans are becoming more difficult to take out. Many small- and medium-sized firms also face unstable cash flow and lack assets to offer as collateral.
Even though some firms are up to standard financially, that would not necessarily guarantee access to bank loans because the State Bank of Vietnam (SBV) has been tightening credit growth.
"Small- and medium-sized firms and household businesses account for 95 per cent of business entities in Viet Nam. If bank loans are not readily accessible to them, bankruptcies are inevitable," IV Board said.
The board underscored bank loans as a catalyst for the firms' survival because they cannot keep their employees on the payroll and reboot their operations without external finances.
The board urged the Government to manage inflation more flexibly to allow sufficient credit for firms. Otherwise, some firms are likely to fold up next year, triggering economic recession, a scenario much worse than high inflation.
The board also called on the Government to maintain their favourable policies on taxes and fees to ease firms' financial burden.
It also called for a quicker disbursement of the preferential interest rate package of VND40 trillion and the infrastructure investment package of VND113 trillion to step up economic recovery.
Lastly, the board recommended the SBV raise the credit growth ceiling to facilitate the flow of bank money into key sectors, such as tourism, exports and agro-forestry-fishery, and at the same time, keep a close watch on cash flows to real estate and securities. — VNS