Vietnamese enterprises should see economic difficulties as a chance to for restructuring, one official has said.
Deputy Prime Minister, Vu Van Ninh, emphasised the necessity to restructure corporate debts
Deputy Prime Minister, Vu Van Ninh, spoke with DTiNews outside the National Assembly’s meeting on June 8. He said that the Government would not be able, and does not have the responsibility to salvage large numbers of businesses who are struggling in the fallout of the economic crisis.
Many NA deputies have proposed that the Government implement tax cuts and exemptions for businesses in the case that the number of bankruptcies continues to increase from the numbers at beginning of the year, as it would affect state revenue. What are your comments on this issue?
The Government has been closely monitoring the situation and has taken a variety of measures to support enterprises as they try to overcome financial difficulties. However, it’s obvious that our priority is to curb inflation. This is not a short-term goal, but one that can only be realised in the medium to long-term. This is the best way to stabilise the economy and create sustainable development. This should be accompanied by economic restructuring, which must be considered a long-term goal.
It’s also obvious that, in facing these economic difficulties, the Government should consider forms of relief other than a stimulus package, such as that of 2009. This will be key to preventing further instability.
I think that each business should consider this a opportunity for restructuring in order to overcome current challenges, with an eye towards sustainable development.
Would the Government be willing to allow a large number of companies to fall into bankruptcy?
Actually the Government does not have the capability to save all businesses. Corporate restructuring is necessary not only for individual businesses, but also for the economy as a whole. Individual businesses must take this opportunity to improve their operations.
Many of the companies that have ceased operation were incompetent and were unable to survive, although some had been quite proactive in changing their business models and filed for bankruptcy in order to set up a new businesses. The latter should be considered a positive trend for development.
It’s very important that businesses weather this crisis. However, many have criticised the Government's relief measures, saying that they have lagged behind economic realities. Interest rate cuts have proven ineffective, as companies have continued facing difficulty in accessing credit. Do you have any comments about this?
Support measures are among the Government's priorities, but our main focus is to create an environment that will facilitate enterprises in gaining capital. It’s true that businesses have encountered difficulties in accessing loans, and the Government has solicited banks' help to improve the situation. Interest rate cuts, however, must be implemented in a way that will not hinder our efforts to tame inflation.
Recent interest rate cuts have been sharp compared to initial plans. Previously banks planned to lower interest rates by 1% each quarter.
Another issue is the restructuring corporate debt. The government should work out solutions to help businesses deal with their bad debts and overcome immediate challenges.
The Governor of the State Bank of Vietnam, Nguyen Van Binh, said that they have pumped a large amount of money into the banking system recently. Where has this money gone?
Each bank itself is actually an enterprise, and they also face a number of difficulties. If the Government does not take any action or issue detailed guidelines, banks will inevitably be careful when considering loans. Any enterprise that fails to repay their debts will be rejected for new loans.
If enterprises are to get through these difficult times and maintain their operations, due attention must be paid to restructuring and dealing with bad debt.
Some say that the Government should focus on restructuring State-owned banks rather than commercial banks. What is your opinion on this issue?
This has already been approved by the Government.