VietNamNet Bridge – There are two reasons that make businessmen refuse to expand their business scale.
SMEs feel discouraged
Cao Sy Kiem, Chair of the Vietnam Association of Small and Medium Enterprises (SMEs), said a lot of SMEs don’t intent to scale up their production, because they cannot receive any support from the State for the expansion.
The owner of an electric cable wire in Thanh Tri district in Hanoi planned to expand his production workshop after leasing 50,000 square meters of premises at a reasonable cost. If the plan had been implemented, the number of workers would have increased from 10 to 25.
However, after some thoughts, the businessman decided to cancel the plan, because he anticipated the loss. He would have to borrow VND2 billion from banks to renovate the production lines. However, the overly high lending interest rate of 14 percent would make the production plan fail completely.
Meanwhile, he cannot expect any support from the State. “If we can generate more jobs, we deserve to get tax incentives or preferential loans,” he said. “However, we cannot receive necessary support.”
Businessmen complained that they not only cannot receive support, they always meet the barriers when following administrative procedures.
Tran Van Ty, Director of a limited company specializing in making products of bamboo and rattan in Binh Phuoc province, said his business is a special one which can generate jobs to hundreds of disable and needy workers. However, it still finds it very difficult to lease land for the head office.
The businessman frankly said at a meeting with the provincial authorities that if the local authorities don’t create favorable conditions for the investment, he will stop making investment in Binh Phuoc.
Meanwhile, a businessman said frankly that he just strives to “earn enough to live on,” while he does not dream of growing up. “It would be more dangerous when you grow up and become a big fish,” he said.
“If you are big, you will be detectable; you will not be able to hide yourself in the crowd. If so, you will become an easy prey for others,” he added.
“Therefore, it would be better to stay small to exist. You will not get support even if you grow bigger and generate more jobs. Meanwhile, you will be obtruded by the state management agencies,” he explained.
Vietnam would not have big businesses?
Analysts, citing the statistics, have rung the alarm bell that the newly set up businesses tend to be smaller, which is really not good for the national economy.
According to Vu Quoc Tuan, former Member of the Prime Ministerial Research Team, Vietnamese businesses cannot grow up because they cannot receive the necessary support.
The credit guarantee funds have been established in only 13 provinces and cities and they nearly have not become operational. Therefore, enterprises still cannot access official credit sources.
Tuan said that the SMEs’ association is not well organized and powerful enough to suggest the solutions to support enterprises. In reply, Kiem from the association said that a lot of suggestions have been ignored, which has made the businesses disappointed.
Dau tu newspaper has quoted its source as reporting that the total registered capital of newly set up businesses decreased very sharply by 14.1 percent in the first four months of the year, by 16.3 percent in five months, 19.9 percent in six months, 17.5 percent in 7 months and 25.8 percent in 8 months.