The HCM City Union of Business Association (HUBA) conducted a survey on production and business activities of 100 enterprises until the end of February 2023 and reported to the HCM City People’s Committee.

Eighty-three enterprises said they are facing difficulties. This includes narrowing of the market (41.2 percent), high inventories (30.1 percent), input material price increases (17.6 percent), inaccessibility to capital (40 percent), high lending interest rates (43 percent), and complicated procedures to access bank loans (38.2 percent).

Many enterprises have stopped signing labor contracts because of the lack of orders.

The number of enterprises with average monthly pay of VND10 million to their workers fell from 80 percent in Q2 2022 to 65 percent in Q1 2023. According to HUBA, this is the warning that the labor market will face difficulties in the time to come.

HUBA’s report emphasized that textile and garment companies have been seriously affected because of high interest rates. 

Meanwhile, the fluctuations of the dong/dollar exchange rate have had a direct impact on the import of input materials, thus leading to possible profit decreases in exports in the early months of 2023.

As for handicrafts and wooden furniture, orders have dropped sharply and are expected to continue to decrease until the end of Q2 2023 by 50-60 percent. 

This is attributed to the sharp fall in demand in the European and American markets.

In the real estate sector, investors are scaling down, stopping investment or ceasing execution of new projects. The market is nearly frozen, while a number of real estate bonds are going to mature, thus putting pressure on the market. 

Export turnover of building materials has decreased, especially in the US, Japan and Europe. Steel prices have decreased by 60 percent as a result of oversupply and demand decrease. Steel output has decreased by 69.3 percent, cement exports down 55 percent. The domestic market also decreases because real estate projects are frozen.

HUBA has mentioned high lending interest rates as difficulty for enterprises. It has asked thvve central bank to curb ceiling interest rate at 8-8.5 percent/year. Most firms have to get loans at the interest rates of over 10 percent per annum.

Besides, the 8 percent VAT should be applied to all business fields until the end of 2023, not just several fields as currently applied.

Duy Anh