The more businessmen lose, the worse losers they became. They tried to resume business from the very beginning, hoping to regain their capital.
The restaurant in district 1 of HCM City is a typical example. The owner borrowed 3.7 billion dong which he thought would help struggle to survive difficulties. After some months, he could pay 726 million dong in interests. However, as the business bogged down in difficulties, he had no money to pay debts.
Six months later, the restaurant’s owner received a debt chasing letter, which said that the total debt he incurred, both principal and interests, had reached 8 billion dong.
HA, a credit officer of a commercial bank in HCM City said that as the demand is weak and the production is stagnant, enterprises cannot make enough money to pay debts, even though they try their best. They still borrow money just to hold out and keep production, while they dare not hope that they would make profit.
HA said that one of his clients owes 750 billion dong to seven commercial banks, and the client has been moving heaven and earth to arrange money to pay bank debts, or he would be charged overdue debt interest rates.
While businesses cannot access bank loans due to a lot of barriers, they can easy borrow money on the black credit market. The leaflets with ad pieces on lending money have been delivered to people every day. T, whose name was found on one of the leaflets, promised that he could disburse money after one week. The loan could be 200 million dong at minimum and 40 billion dong at maximum.
When Tien phong contacted T, he repeated that the procedures for the disbursement would be very simple and would not be as complicated as banks’. However, T said, the interest rates would be negotiable.
The stagnant business has not only put enterprises in distress, but also has put banks on tenterhooks.
A judge of a court has revealed that commercial banks are checking their loans and paying special attention to the loans they think irrecoverable. The banks have said they would take legal proceedings against the debtors to recover the debts.
The judge said that the court has received a lot of complaints from banks which claimed for the debts worth 10-70 billion dong.
Judge Phan Thanh Hung from the district 12 people’s court said that about 100 economic lawsuits regarding to asset dispute are being handled by the court.
According to Lawyer Nguyen Huu The Trach from the HCM City Bar Association, in most cases, businesses cannot pay debts because they cannot sell products. He said that commercial banks themselves have become very cautious when disbursing money at this moment. Especially, they would surely say “no” to the proposal to borrow money for real estate projects.
VK Garment Company in district 12 of HCM City, which was once a well-known company with 3000 workers, now also has to struggle to survive. The difficulties rushed down in mid 2011, when the company could not obtain orders, which led to the production stagnation.
The company now has to pay 200 million dong a month for the interests of the loans it borrows from two banks. In order to get money to pay debt, the director of the company has decided to sell two houses and a workshop in district 12.
As businesses cannot access bank loans, they tend to borrow money on the black market. However, the borrowing cannot help them escape the difficulties. Especially, the problems of businesses have become even more serious, when the debts have increased dramatically due to the exorbitant high interest rates.