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Enterprises say rate support not enough  (16/02/2009) 
HCMC – Enterprises need more support from the Government than what is provided in the current subsidized lending, heard a meeting here on Thursday between the Ministry of Industry and Trade, the State Bank of Vietnam and corporate executives in many sectors.

Nguyen Chien Thang, chairman of the Handicraft and Wood Industry Association of HCMC, or HAWA, said that the difficulty for enterprises at this time was a sharp drop in orders, which started in 2008 when input costs and lending rates increased, driving up the price of many export products.

Thang said that one-fifth of local enterprises who registered to join VIFA, a woodwork fair expected to open in March, forfeited their deposits and withdrew from the exhibition as they did not have enough money to join the event which was a chance to introduce local products to foreign customers.

He said that the number of withdrawals could increase, hurting the country’s image as there should be about 600 foreign visitors, double last year’s number, to learn about Vietnam’s woodworks.

Industry and Trade deputy minister Nguyen Thanh Bien required HAWA to submit to the ministry an official petition for financial support for enterprises joining the expo before the ministry would find the capital source. He also asked other trade associations to consider promotions aiming to develop exports.

“If those plans need support from the authorities, associations should submit plans to the ministry. However, those plans must state the percentage of increase in new contracts that joining the event would mean to convince the ministry to give support, including financing the cost of inviting foreign customers to Vietnam,” Bien said.

Other executives said the Government’s support program should be extended to be more effective.

While most enterprises are happy with the subsidized lending from the Government for short-term manufacturing and trade loans, effective for a few months only, they also need support in terms of mid- and long-term capital to invest in technology.

Pham Trung Cang, vice chairman of the Vietnam Plastic Association, suggested that the Government give the rate support to enterprises borrowing money to buy equipment, with an aim to increase competitiveness in the future.

Tran Thien Hai, chairman of the Vietnam Association of Seafood Exporters and Producers, said that as the global economy was in recession, all products, including machines, were cheaper and that was a good chance for enterprises to invest in technology.

“All enterprises need support on middle-term capital to improve technical processes to ensure higher product quality,” Hai said.

Hai said that 70% of catfish and shrimp farmers have stopped working, driving up the price of these materials and decreasing the competitiveness of local enterprises. Therefore, seafood exporters need support on middle-term capital to develop the breeding areas. “The rate support would last for at least one to 1.5 years,” Hai said.

Pham Chi Cuong, general secretary of the Vietnam Steel Association, said that many steel enterprises have had to halt ingot production because of a lack of capital. “The Government should support firms with effective projects so they can continue manufacturing and pay bank loans,” Cuong said.

Nguyen Dong Tien, Deputy Governor of the central bank, said he would submit all suggestions to the authorities to deal with in the coming time.

The country’s export revenue for last month is estimated at US$3.8 billion, 24.2% less than January 2008. The Government targets US$70 billion in export revenue this year compared to last year’s US$62.7 billion.


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