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It’s difficult to help export companies: expert   2009-03-27 - SGTT

Professor Dr. Kenichi Ohno from the Vietnam Development Forum, who began his studies about Vietnam’s economy in 1995, said that Vietnamese enterprises, especially export companies, are facing big difficulties and that it is really difficult to help export companies.


Professor Dr. Kenichi Ohno

In the interview given to local newspaper Saigon tiep thi, Mr. Ohno mentioned the problems Vietnamese companies are facing. The Government has decided to apply the interest rate subsidy program, but Vietnamese businesses don’t want to borrow money because they cannot find the ‘outlets’ for their products. Vietnamese businesses have been advised to return to the home market, however, the purchasing power of the market has decreased.


He said that the shifting from the export market to the domestic market would be reasonable for some companies and products, but the advice is not suitable to all. The companies which specialize in export frozen shrimp to the US or Japan, for example, will find it difficult to push up the sale of the products in the domestic market.


When asked about the way out to the current problems, Ohno said that the Government needs to support the poor people, who prove to be the most fragile people in the economic recession.


It needs to follow the long term strategies to push up agricultural and industrial production. In fact, Vietnam cannot settle the problem at once, but it only can do that in the medium or long term.


Regarding the interest rate subsidy package, Ohno thinks that the package will have limited impacts. There exist the complicated formalities that cause difficulties in the disbursement of the capital.


Even when banks really want to lend money, businesses would not borrow capital when the demand has been decreasing. Those businesses, which dare borrow money at this moment, prove to be the ones which still can have good business performance in the context of the economic recession. As such, subsidizing loan interest rates for profitable businesses is not a good idea at all.


The professor thinks that if the Government wants to support businesses, it would be better and simpler to cut taxes immediately.


Ohno said that he had found out from the meetings with foreign investors that they do not have the money for investments any more. They are now not interested in expanding investment and business, especially in the short term.


Jetro (Japan External Trade Organisation) has said that a lot of Japanese businesses in Vietnam, especially the ones which export 100% of their products, are facing big difficulties. The enterprises specializing in making electronic components have to cut down the capacity by 50%. Canon and Panasonic are bearing great impacts of the global economic recession, while they cannot turn their goal to the Vietnamese domestic market.

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