The Government says it is not its job to save failing enterprises; resources are limited. Deputy Prime Minister Vu Van Ninh spoke to Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) on the topic.
Many lawmakers have asked the National Assembly to reduce or waive taxes for enterprises to avoid bankruptcy. What is your comment?
The Government has come up with many measures to help enterprises overcome their difficulties. However, whatever measures we take are aimed at controlling inflation and stabilising the economy. These cannot be achieved in a short time. They are the foundation for rapid and sustainable development of our national economy. In the meantime we have to continue with other activities, particularly the process of economic restructuring and renewal of the growth model.
Enterprises should consider the crisis as an opportunity to restructure, to make their business more efficient. Support from the Government alone cannot make them strong. Government support should be seen as a catalyst. Their own efforts are very important. Combining these factors, I'm sure they'll overcome difficulties and become strong again. In the long run their production will become sustainable. It is impossible for the Government to save enterprises without attaching any conditions. Also, our resources are limited.
"Restructuring" should be interpreted in a broader way as it covers all economic sectors, including public and private. This is normal in the process of sustainable development.
Though the Government has lowered interest rates to help enterprises overcome difficulties, many have said they are unable to access credit. How do you respond?
As I have mentioned, tax reduction or exemption is one of several support measures. But what's most important is to enable enterprises to access credit.
The State Bank decided to cut the deposit interest rate on an order from the Government and because the inflation rate was going down. Some people have complained the Government was slow in saving thousands of enterprises from going bankrupt or having to suspend their production in the first six months of this year. According to the road map introduced by the State Bank early this year, there would be a 1 percentage point cut in the deposit interest rates per quarter. But in reality, the rate was already down 4 percentage points on June 11. This is a positive sign.
In the near future, the bank is considering further reductions to deposit interest rates to enable enterprises to access credit. The next step is to restructure enterprise debt. At present, normal debt has turned into bad debt – a factor hindering enterprises' access to credit from bank. If we are successful in restructuring bad debt, I'm confident enterprises will be able to borrow money to resume their normal business.
More recently the State Bank pumped money into banks in the hope it would save enterprises. But the money did not reach its target. How do you comment?
Banks are commercial. They have to calculate carefully before deciding to lend money to their clients. When a client cannot pay debt it becomes bad debt. That's the principle in banking. That's why it is imperative we restructure the debt, the key factor to solving the current situation for both the banks and the enterprises and for our country's economy. — VNS