Tin mới
SMEs Restructuring To Survive (01/11)
01/11/2011 - 15 Lượt xem
Sluggish growth
Experts claimed that SMEs play a very important role in restructuring the labor force, boosting the economy, increasing export revenues, creating jobs, eradicating hunger, reducing poverty and ensuring social security. Although SMEs have received a small amount of state budgets, they have contributed a large amount of revenue to the state. SMEs have also had a great impact on people's livelihoods and general social stability.
However, given economic troubles in the world, particularly inflation in recent years, SMEs are facing many difficulties due to the small scale of business and production facilities, poor management skills, and limited access to capital. It is more difficult for SMEs to obtain bank loans despite high interest rates since banks have had to tighten credit to prevent inflation.
Higher interest rates and raw material prices have pushed production costs up, while prices SMEs are able to charge for products have increased less. In addition, other costs, including rising taxes, rent and transportation costs, have together further hurt SMEs.
Dr. Nguyen Van Nam, the deputy director of the Business Research and Development Institute, noted that although raising interest rates is an effective tool for any economy to curb inflation, it would certainly put businesses in a tougher position.
Unfortunately, the more an enterprise relies on bank credit, the harder their business is hit by rising interest rates. Most SMEs have weak financial capacity, hence they become vulnerable to inflation and high-interest loans, which raise the risk of production interruptions or bankruptcy.
Ministry of Planning and Investment statistics show that, during the first nine months of 2010, there have been 48,700 enterprises either dissolved or interrupted, an increase of 21.8 percent compared to the same period last year. Meanwhile, new business and capital registration have dropped by 7.8 percent and 4 percent, respectively.
This year is very challenging for SMEs. New improvements are visible in the Vietnamese economy. However, big problems remain in infrastructure, macro economy, institutions, human capital and material resources, administrative procedures, and more. As a result, SMEs are less competitive than big corporations.
Restructuring to survive
Economic experts said that most SMEs are family-based and are unofficial, which explains why it is difficult for them to raise capital and obtain bank loans.
To overcome these disadvantages, it is time for SMEs to restructure their businesses. Most enterprises want to streamline their operations and achieve scale, or to take on new business in order to reduce expenses, to grow their business and retain workers. However, these measures are not sufficient for SMEs.
At a workshop on support for SMEs in Vietnam held recently in Hanoi by the Business Research and Development Institute under the Hanoi Industry and Trade Association in association with Hanns Seidel Stiftung of Germany, economic experts suggested that SMEs should make partnership with each other; and with the state-run and foreign-invested corporations to create value chains. They also claimed that once SMEs work together, they will be able to become suppliers and satellite businesses for larger enterprises and multinational groups.
Dr. Nguyen Dai Lai from the State Bank of Vietnam said that to solve capital shortages for now businesses should save money themselves before asking for help from banks.
Those enterprises that have stable input and output relationships, have joined the same business or occupational association, and are reputable should ally with each other to buy or sell on credit by issuing commercial paper to stay in business.
The law on commercial paper enables and encourages handicraft villages and business associations to issue commercial paper in systematic and diverse array of forms, Nguyen Dai Lai said.
In addition, merger and acquisition (M&A) among SMEs is needed to create businesses with stronger capital sources, technology and manpower. This will require SMEs to change the way they do business to become more transparent, reputable and cooperative. This means restructuring of business administration.
According to experts, the government needs to reduce the current enterprise income tax on SMEs and have policies to support SMEs, handicraft villages and family businesses that produce food and consumer goods in order to meet domestic consumption and export demands; and to continue playing an important role in stabilizing the economy and the society in Vietnam./.
Source: VEN
Source: VEN
