Vietnamese firms face capital crunch despite orders

Economist Dinh Trong Thinh highlighted the return of orders to Vietnamese enterprises after a challenging period marked by declines, attributing this positive trend to efforts in maintaining traditional markets, expanding into new ones, and leveraging free trade agreements (FTAs).

Signs of recovery in production and business are emerging for the current year, Thinh noted.

However, the resurgence in orders belies the underlying struggle faced by enterprises, particularly concerning capital shortages.

Statistics from the ministry of planning and investment revealed a concerning trend: in January alone, over 53,800 enterprises exited the market, marking a significant increase of 22.8 per cent compared to the same period last year.

This figure nearly doubled the number of new firms and those resuming operations.

Meanwhile, optimism regarding access to loans remains low among enterprises, with only around 6.8 per cent expressing confidence for 2024. VIS Rating indicated that falling global demand, inflation risks, and capital accessibility issues are eroding enterprises’ strength.

Nguyen Dinh Tue, director of HCM City SMEs Promotion Centre, stressed the need for measures to enhance access to banking credit, citing difficulties faced by SMEs in securing loans due to financial transparency issues and a shortage of mortgage assets.

In response, the State Bank of Vietnam has set a credit growth target of 15 per cent for the year, signalling a readiness to increase it to 16 per cent if necessary.

Fibre2Fashion News Desk (DR)