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In price storm, Vietnamese businessmen still wasting their money   2011-06-08 - Viet Nam Net

Businessmen are experiencing a very difficult period when the input costs have been increasing dramatically, while the purchasing power remains weak. However, they still drive luxurious cars, spend hundreds of millions dong on parties and throw money to frivolous expenses.





Vietnamese businessmen have been advised to cut down expenses and spend less money to rescue businesses from the current difficulties. However, the plans to cut down expenses remain just “slogans” that remain on paper. In fact, they still “throw money down the drain”, because they believe that spending much money is “the job of millionaires”.




30 percent of businesses bankrupt




According to Le Dang Doanh, a well-known economist in Vietnam, trade deficit, high inflation and high interest rates are all the most outstanding features of Vietnam’s economy. He said that the current difficulties are the consequences of the problems of the national economy which have existed for many years and remain unsettled, and the consequences of unreasonable policies applied in the last many years.




Though there have been no official statistics, the well known economist has cited the figures from the taxation bodies as saying that it is estimated that 30 percent of registered businesses have been bankrupted.




The number of newly established businesses and the total volume of registered capital have also decreased significantly. In the first four months of 2011, the number of newly registered businesses was just equal to 90.4 percent, and the volume of registered capital was just equal to 78.6 percent of that in the same period of 2010. The figures show that the capability to access loans and the business opportunities have decreased sharply.




The Vietnam National Oil and Gas Group (PetroVietnam) has been well known as a giant economic group which contributes 30 percent of GDP and 20 percent of the state budget. However, in order to stand firmly in the current difficulties, Tong Quoc Truong, Head of the Investment and Development Division of PetroVietnam said that the group now has to restructure the investments and narrow the operation scale.




PetroVietnam initially planned to use 127 trillion dong for investment projects in 2011. However, as the dong/dollar exchange rate has been fluctuating sharply (the dollar price has surged from 18,500 dong per dollar at the time when the investment plan was drawn up to 21,000 dong per dollar), which has made the total investment capital needed increase dramatically, PetroVietnam has to delay some projects.




The number of delayed projects accounts for 10 percent of the planned investment projects, capitalized at 12,700 billion dong.




Tran Anh Vuong, Chair of Bac Viet Steel Corporation, said that the difficulties in 2011 are bigger than in 2008, while the difficulties in 2008 were bigger than in 2005, and the situation in 2005 was worse than that in 2000. This shows that difficulties always exist.




When VVG entered the bourse in 2008, VVG shares were traded at 23,000 dong. However, the share price has plunged to 7000 dong. “Businesses have been told to restructure businesses and sell parts of assets, but who will buy the assets in such circumstances?” Vuong said.




Practicing thrift – the best policy




Ha Thu Thanh, General Director of Deloitte Vietnam, an auditing firm, noted that despite the big difficulties, businessmen still spend much money because they want try to show off by driving luxurious cars and attend luxurious parties.




“I have been working as a general director for 13 years, but I have never driven too luxurious car. When I go to a meeting, I take taxi,” Thanh said. “Meanwhile, directors of small companies like driving super cars which cost their businesses a lot of money”.




“Saving money to create finance governance efficiency is the thing enterprises should prioritize at this moment,” she said.




A businessman, who specializes in exporting goods to China, told Doanh that he needs to eat two turtles a week (85 million dong for each), or he feels unpleased.




“This is a kind of frivolous expense,” Doanh said.




Doanh went on to say that Vietnamese businesses should follow in the steps of a Japanese supermarket, which has stopped the escalator system to save electricity, and follow in the steps of American people, who walk to the office after the meetings with partners.




Though Doanh admitted that in Vietnam, joining parties is the most popular way to establish new relations, he has advised businessmen to exchange views and work together without beer and alcohol.

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