At the National Assembly Standing Committee’s discussion session on the situation of enterprises, many problems faced by enterprises were mentioned.
National Assembly Deputy Chair Tran Quang Phuong said: “Under the program on meeting voters, we met businesspeople and they told us that they had spent their last dong to cover basic needs and exist in the last two years."
This is in line with the report that nearly 20,000 businesses leave the market each month, double the previous period.
By the end of April, credit provided to the entire economy had increased by only 2.66 percent, or just half of that of the same period of previous years.
Lending interest rates have become very high. It is difficult to access bank loans. The number of orders from partners is on the decrease. These factors, plus other problems, have caused difficulties for enterprises.
The consequences are serious as described by Dung: “Many large corporations we know have had to sell most of their assets. They have sold most of the things they can sell, and at just 50 percent of the real value. This is really worrying."
“Who are buyers?” he continued. “Most of them are foreigners. Foreign takeovers are the story we have warned about many times. It is really serious. There are large corporations that we need to protect and support for the sake of the development of the economy."
Many merger and acquisition (M&A) deals have been made, sometimes noisily and sometimes quietly.
In the first months of 2023, people heard about a big deal worth $1.5 billion which was under negotiation, and a deal of the Sumitomo Mitsui Financial Group buying 15 percent of shares of a Vietnamese bank valued at $1.5 billion.
A number of big deals were made last year. Viva Land took over the Capital Palace Ba Dinh project at the price of $550 million, and Keppel Land acquired Anh Khanh – Mai Land Hanoi City urban area project worth $120 million.
Also, there was the merger of the Yen Phong Industrial Zone (IZ) project by Logistics KTG and Boustead worth $141 million.
According to a foreign financial group, in the first 10 months of 2022, total M&A value reached $5.7 billion.
The energy sector proved to be the hottest in 2022 with M&A value of $600 million, increasing by six times compared with 2021.
People may argue that M&As are normal in a market economy, and that there is no need to worry about foreign takeovers, because no matter who the owners of enterprises are, they have to pay tax, generate jobs and contribute to growth.
But this is just a quibble. Statistics about M&As, as far as I know, have not been updated.
The health of enterprises, of course, depends on themselves. However, in many cases, enterprises have had to withdraw from the market because of unreasonable macroeconomic policies.
Chair of the National Assembly Vuong Dinh Hue said the growth decline became clearer in the third quarter of 2022.
The GDP growth rate fell from 13.7 percent in the third quarter to 5.9 percent in the fourth quarter and then to 3.32 percent in the first quarter of 2023.
He stressed that difficulties have appeared in the markets, from finance and monetary to real estate.
“Quadrillions of dong worth of capital for public investment are getting stuck at banks. Meanwhile, the national economy is lacking money. The money supply (M2) is short. The inflation rate is low. The interest rates are high. All these are paradoxes,” he said.
Dung pointed out that the credit policy is "problematic": it is too loose sometimes and too tight at other times, which causes difficulties for enterprises.
What are the solutions for now? Loosening credit, cutting down interest rates, improving the corporate bond market, accelerating public investment and cutting tax are the policies which have been put into discussion.
Dung stressed solutions to eliminate the obstacles in the investment environment.
“We have been struggling for the last few years to improve the investment environment, eliminate unnecessary business conditions and sub-licenses. However, thousands of new procedures and sub-licenses have been born through the new legal documents issued by ministries, branches and local authorities,” he commented.
Dung said that the Ministry of Planning and Investment (MPI) has assigned the Central Institute of Economic Management (CIEM) to check all the legal documents to find out unnecessary documents which are contrary to the laws and restrict people’s and enterprises’ rights.