According to the 2014 survey of Can Tho Branch of the Vietnam Chamber of Commerce and Industry (VCCI Can Tho) assessing the revenue and profit of many businesses in the agricultural sector, fisheries, construction and real estate, manufacturing, trade, and services from June to mid-August, the market forecast abilities, especially the forecast ability of enterprises, are not strong, which has affected business operations. This issue was presented by Ms Nguyen Thi Thuong Linh, Deputy Director of VCCI Can Tho, at the conference on the economy of Mekong Delta in the context of the economic dependencies and the concerns of the businesses, which was held recently.Lack of market information At the conference, Ms Linh cited survey results indicating that there are 43 percent of businesses with revenue less than 50 percent, and 51.8 percent with revenue more than 50-70 percent, 55 percent businesses with profit less than 50 percent and 25 percent of businesses with 70 percent profit lower than planned. Compared with the original forecast of enterprises, there are only 5.4 percent over 59.4 percent businesses with an increase of revenue, 8.9 over 29 percent business with average profit increase and 8.9 over 42 percent businesses with increasing number of orders. On the issue of cooperation with Chinese partners, Ms Linh said that there are many enterprises doing business with Chinese enterprises, but over 90 percent of them have no official information about their partners. There are many advantages in the cooperation between Vietnamese companies and Chinese partners; for example, the purchase is definitive; the payment in cash is quick; the standards and product quality are not too strict; and the demand for imports of raw materials is high. However, others risks could be seen; the quality is not really stable; the price is fluctuating; Chinese companies are often unstable; and the sustainability is not high. When asked about what Vietnamese companies will do if the bond with Chinese partners is breaking, most businesses do not have official answers. This shows the ability to predict the market of most Vietnamese enterprises is still low. The enterprises have no long-term plans to respond to market changes. Based on the evaluation on the difficulties of enterprises in general and the enterprises of the Mekong Delta in particular under economic dependence, Vo Hung Dung, Director of VCCI Can Tho said the number of businesses in the Mekong Delta in 2013 accounts for 51,000 or 10 percent of businesses throughout the country; the private enterprises accounts for about 98 percent of total businesses and contributes about 1.2 percent of FDI and the state-owned enterprises account for 0.8 percent. However, in the present context, the enterprises are facing many difficulties such as difficult access to capital, difficult approaches to markets, non-tariff barriers, and increasing input price. Especially, the market situation has remarkable changes when the market predictability of Vietnamese enterprises is still low. In particular, the difficult access to capital is the most major disadvantage of businesses in the region, which significantly affects the economic development of the region. Although the government has enacted numerous measures to remove the problems, such as restructuring of the state-owned enterprises, banking restructuring, and granting of preferential loans for businesses. Leveraging the investment flow of FTA Speaking at the conference, economist Pham Chi Lan said, Vietnam is integrating in the world economy more deeply and widely and signing new agreements. She cited some important agreements such as ASEAN Economic Community in 2015, the strategic economic partnership agreement on Trans-Pacific Partnership (TPP), the free trade agreements with the European Union and South Korea, the agreement with Customs Union of Russia-Kazakhstan-Belarus, the European Free Trade Agreement. The FTAs help gain greater opportunities for the market access, exporting and investment attraction, especially with the faster market liberalisation agreement such as the new generation FTA and more preferences like VJEPA. Therefore, it is necessary to engage both of the resilience of businesses and support roles of the Government. The enterprises should increase the ability to tap into the trade facilitation, meet the requirements of technical barriers, participate in supply chains, engage in the distribution network and improve collaboration to enhance the competitiveness of enterprises. According to Vo Hung Dung, businesses should be quickly accessible with the evolution of the market for appropriate changes. To the Mekong Delta, agriculture is an economic fundamental, but enterprises in this sector should be not just base on agriculture and rely only on old methods for a new era. Also according to Mr Dung, there should be action plans and solutions for markets for agricultural goods rather than measures to improve efficiency and stimulate production. On the business side, to maximize the benefits that are brought form the agreements, Dr Le Dang Doanh said that the companies need to restructure financial mechanism and production methods, transfer to production towards the market demand rather than traditional production, restructure and modernize the production and business operation. In addition, it is necessary to link the value chain, diversify the export markets and exploit new markets such as Japan, Europe to meet higher demand and set higher prices. To adapt to the new situation, Nguyen Thi Thuong Linh said businesses must regularly get updated policies and circulars to take advantage of support programmes of the Government and avoid risks. Besides the efforts of businesses, according to Ms Linh, the Government needs to reinforce the stable macroeconomic policy and economic development policy that should be based on the conditions of the enterprises to get support from the enterprises. Furthermore, the government should continue to support the businesses to access capital and get rid of the mortgage loans, policies and measures for development cooperation. With the characteristics of the Mekong Delta region, according Linh, the government should evaluate and choose the stage and area with major competitive advantages to provide support for the businesses to participate in the global supply chain. Thu Ha
Posted on: Fri, 22 Aug 2014 11:20:28 +0000