Vietnamese garments and textiles companies are trying to reduce processing for exports while developing their own brands and proving the business competence (Photo: www.giaoduc.edu.vn).

(VOVworld) - 2012 will be a difficult year for Vietnamese enterprises due to last year’s inflation and the global economic downturn. To solve this situation, the Government has outlined several policies to support domestic businesses and help them to overcome any obstacles and boost production.

During the first few months of this year, the continued deflation of the global economy, in addition to higher inflation in the local market put domestic companies in a harder situation than ever. Many of them had to scale down production levels or were likely to go bust. Their biggest difficulty remained banking loans and a high rise in input costs. Tran Viet Anh, Vice President of the Ho Chi Minh City’s Rubber and Plastic Manufacturing Association, says 'Small and medium-sized enterprises have very little access to capital sources. Plastics manufacturers in Ho Chi Minh City are a good example. They have to use backward technologies resulting in low productivity and uncompetitive products. Another difficulty is that businesses must pay value added tax as soon as they import new equipment'.

To help enterprises overcome these problems, the Prime Minister has asked the State Bank of Vietnam to drop the lending interest rate. The central bank says it will decide on the interest rate according to the inflation rate which is estimated to be below 10% for the whole of 2012. As a result, the interest rate on loans will be a bit higher than the expected inflation rate. The Finance Ministry plans to submit to the Government monetary solutions to rally domestic production and businesses while prioritizing investment in breakthrough industries included in the national socio-economic development strategy. These include agriculture, exports, support industries, processing and SMEs.

Together with its national economic restructuring, the Government has asked all ministries and sectors to work out policies to exempt, reduce, and extend corporate income tax. Authorities at all levels are now directed to hold more talks with enterprises to inform them of the situation and have a thorough grasp of their problems to provide timely and effective assistance. In addition to the Government’s support, businesses themselves have overcome the hard times by making appropriate restructuring or adjusting business strategies. Vuong Thanh represents a company in Ho Chi Minh City 'In general, the retail market is having a difficult time, while exports are hit bad due to a lack of contracts. Therefore, we think we will have to reduce costs and personnel numbers while improving our efficienc'.

Deputy Prime Minister Vu Van Ninh highlights additional measures to assist companies 'We need to continue to prioritize inflation control and stabilize the macro-economy. This is the right thing to do and we should stick to it, with the top priority being controlling inflation. We must also deal with arising issues to harmonize inflation and macro-economic stability to ensure proper growth. We must also manage the economy flexibl'.

Vietnam earned nearly 25 billion USD from exports in this year’s first quarter, a remarkable result, considering the domestic and global economic difficulties.  

To Tuan