Huge number of loss-making firms hinders city’s growth

Van Nam

Under normal conditions like in previous years, profitable enterprises should account for 51% of the total number. However, only some 28% of about 112,500 enterprises active in HCMC were making profits in the first quarter, said Do Hoang Anh Tuan, deputy minister of finance, at a meeting between HCMC leaders and central authorities.

The meeting, also attended by Deputy Prime Minister Vu Van Ninh, was convened last Friday to review socio-economic development of the city in 2011-2013 and discuss development targets for 2014-2015.

In this year’s first quarter, the number of enterprises posting profits only represented 28% of the total number of firms active citywide, while losses of the rest totaled around VND22.7 trillion.

The situation improved a bit in the second quarter but the number of firms making profits only reached 30.9% while the losses amounting to roughly VND27.8 trillion.

The aforesaid figures giving a gloomy dab on the economic picture indicate the challenges for the city’s economic development target in the next two to three years are really huge if no breakthrough solutions are introduced soon.

Tuan offered some suggestions, asking the city’s government in the next two years to focus its capital on crucial areas. Total investment capital for the city’s development averages out at VND230 trillion annually including bond sale amounts while the capital allocation proportion for the key economic sectors makes up just some 25%.

The city therefore should raise the investment for the key economic sectors to 50%, with the balance set aside for other industries, otherwise the city will hardly change for the better in the next two years, Tuan proposed.

Total GDP of the city posted annual average growth rate of 9.5% from 2011 to 2013 compared to the 12% targeted for the 2011-2015 period. Its GDP growth is forecast at 9.2% this year, equivalent to last year’s figure and projected to reach 9.5% next year and over 9.5% in 2015.

At the meeting, vice chairwoman Nguyen Thi Hong informed total investments for the city in 2011-2013 posted an average growth rate of 10% annually.

The city’s State budget revenues totaled around VND624.8 trillion from 2011 to 2013 while its total spending amounts were about VND146.8 trillion in the period, 31% higher than the planned amounts.

Hong estimated this year’s revenues for the State budget at a maximum of VND220.95 trillion, still falling short of the target by 6.1%.

It is because the central government asked for too high a revenue growth target, at 20.73% against 2012, while economic conditions in general are worsening, Hong said and suggested that the central government allow for the city to revise down the revenue target.

Deputy OM Vu Van Ninh, while admitting to numerous difficulties regarding the revenue for the State Budget, said the target should not be revised down now as there are few months left for the year. However, a more suitable revenue target for the city will be weighed for 2014, he said.

Sponsored links
comments powered by Disqus