(PLO)- Facing difficulties of the US and European markets, many companies returned to the domestic market and moved to other markets to exploit in order to reduce risks.
Exports of many enterprises (enterprises) in the fashion industry, furniture, plastic and rubber… suddenly dropped sharply from September, despite the good growth before. Entering the fourth quarter of 2022, export enterprises face more difficulties.
Orders drop, cash flow is short
Mr. Pham Van Viet, General Director of Viet Thang Jean Company, cum Vice Chairman of Ho Chi Minh City Textile and Garment Embroidery Association, assessed that the purchasing power in the European market decreased sharply.
Right on Christmas this year, the company’s jeans products only received monthly orders, while before, orders were received quarterly and annually. The US market also fell 40%, even recently the company has not received any orders.
Exports are difficult, textile enterprises have moved to the domestic market.
He said that he had just exported consignments to the US and Germany but was stuck at the port, only the Japanese and Korean markets could cover 50% of the company’s exports.
Many businesses have to sell products at 30%-40% lower than cost to have operating cash flow with very high interest costs, while waiting for the next credit allocation.
In some difficult markets, due to improvements in scale, environmental commitment and product quality, customers require Vietnamese enterprises to invest in new machinery and technology, but lack of capital, enterprises cannot meet the requirements. , leading to the risk of not being able to maintain position in the chain.
Besides the decline in orders, businesses are facing financial difficulties due to a backlog of input materials and finished goods, leading to a cash flow shortage. “Meanwhile, it is difficult for businesses to access loans from banks due to the lack of credit room,” said Mr. Viet.
Similarly, Mr. Nguyen Van Sang, Director of Vietnamese Goods Company, owner of the Furnist supermarket chain, said that orders from the US and Europe decreased by 40%-50%. Some foreign partners have sluggish business and inventories, so they are slow to pay, making it difficult for domestic enterprises to obtain capital to maintain production and business activities.
“Although our credit limit is still 40%, it is impossible to get a loan. The bank’s failure to disburse capital is expected to last until the end of 2022, so businesses continue to face difficulties,” said Mr. Sang.
Representatives of many other companies also said that they are facing difficulties because of lack of orders, customers offer prices only 40%-50% compared to normal.
Meanwhile, input costs increased due to high inflation, high interest rates and difficult access to loans from banks. In addition, the increase in the USD exchange rate caused the cost of importing raw materials to increase, but enterprises did not dare to increase the selling price of products for fear of losing customers.
Businesses looking for new markets
Faced with difficulties, exporters are re-evaluating the overall situation of markets, customers, products… to come up with production and business plans, and actively seek new markets. Businesses are also flexible in payment methods instead of just focusing on USD.
General Director of Viet Thang Jean Pham Van Viet said that compared to export, the domestic market only accounts for 5%. Therefore, the company will try to increase the domestic market share to 10% in the near future. Viet Thang also moved to exploit two new markets, Canada and Australia.
“Currently, about 10% of enterprises of the Ho Chi Minh City Textile, Embroidery and Knitting Association have to return to the domestic market. Some companies are also starting to build a brand, but the fastest it takes up to three years for consumers to get used to. The domestic market is very good but we need to invest heavily rather than going back and selling immediately. Consumption behavior of the domestic market changes very quickly, “- Mr. Viet cited.
Mr. Nguyen Quoc Anh, Chairman of Ho Chi Minh City Rubber Plastic Association, also said that exporters are currently calculating to develop in the domestic market with a population of up to nearly 100 million people. However, changing the market is difficult to do overnight. Besides, the domestic market’s low purchasing power is also a concern of enterprises.
In particular, in order to reduce costs, businesses promote the application of technology in business management and operation; redesign of supply chain networks; exploit the benefits from free trade agreements (FTAs) to speed up exports and take advantage of tariff preferences.
Should have an open policy, supporting businesses
Many experts believe that in order to remove difficulties for businesses, banks need to increase lending room and should have an early opening policy to support all industries to maintain production and business.
At the same time, the tax industry needs to quickly refund value-added tax to businesses. At the same time, the bank loosened the credit limit, quickly implemented a package to reduce interest rates by 2%; lending enterprises new loans to continue production, business, find new markets to overcome the difficult period.
The Private Economic Development Research Board (Board IV) has just sent a report to the Prime Minister, stating the major challenges of enterprises.
Accordingly, difficulties in cash flow, including working capital, medium and long-term investment capital, are putting businesses, especially private enterprises, in extremely urgent and difficult situations; affecting the competitiveness of many industries and fields and within the domestic economy.
To support enterprises’ recovery efforts, Board IV proposed the Government consider extending until the end of 2023 a number of policies to support businesses that have been effective during the COVID-19 epidemic, such as the 2% VAT reduction policy. , the policy of tax relaxation, postponement of the application of the new land rental tariff according to Decree 96, credit policies such as restructuring the repayment term, maintaining the debt group…
Board IV proposed the Government direct the State Bank to work with commercial banks to research and design preferential credit packages for key domestic production sectors and fields, including items such as: for small and medium enterprises so as not to destroy the capacity of enterprises…
There is still room for credit growth
The State Bank of Vietnam (SBV) has just sent a dispatch requesting credit institutions and foreign bank branches to seriously implement and implement credit growth in 2022.
Currently, credit growth in the whole system has increased by about 11.5%, while the growth target for this year is 14%. Therefore, there is still room for credit institutions and foreign bank branches to continue to increase credit, meet the capital needs of businesses and people, and contribute to supporting economic growth.
The State Bank requires credit institutions with credit growth limits to actively balance capital sources, ensure safety ratios, and actively disburse credit into production and business fields.
Grandfather NGO NGOC KHANH, Vice President of Vietnam Industry Support Alliance:
Need to reduce corporate income tax
Currently the inventory of the supporting industry is very large. Customers in Europe and the US have no new orders, while old orders are only 1-2 months away.
If new orders are received, the requirements for technology content are higher, requiring newer equipment and machines to produce. If you want to have a new machine, you have to invest more money, but now credit is very difficult.
The State needs to open up credit sources, giving priority to manufacturing enterprises. At the same time, reduce corporate income tax for supporting industries in 2022 to serve as a premise for recovery and development in 2023.
Grandfather DING HONG KY, Chairman of the Board of Directors of Secoin Company, Vice Chairman of Vietnam Association of Building Materials:
Accelerating disbursement of public investment
To help the building materials industry overcome difficulties, the State needs to accelerate disbursement of public investment.
If we have a healthy real estate and financial market, no matter how unstable the world market situation is, if it affects Vietnam, the level will be much lighter. But now, along with the bad situation in the world market, Vietnam is more affected by domestic stories, leading to more difficulties.
The state and policy makers must solve these problems. Let’s self-empower, self-enlighten our economy, open up the blood of our own economy first, before expecting the world to recover.
THI LINH – AN AN AN AN