VietNamNet Bridge – Under the Government's newly issued Resolution 02, some small- and medium-sized enterprises (SMEs) no longer qualify for preferential policies, which has left them struggling to pay debts and continue production, the chairman of HCM City's District 8 Business Association said.

Clothes are manufactured at Gia Dinh Garment Co. The company and other SMEs have said they are facing challenges created by Government Resolution 02.

Speaking at a meeting held on March 27, by the city's Union of Business Associations in collaboration with Business Association of HCM City's District 10, Tran Ngoc Duong said Resolution 02 re-defined SMEs as companies with under 200 employees and an annual turnover of VND20 billion (US$962,000) or less.

"Under this resolution, most enterprises in District 8 would no longer be classified as SMEs since their annual turnover is higher than VND20 billion," he said.

Preferential policies such as bank loans and tax exemptions would not be available to companies that are no longer considered SMEs.

Tran Ngoc Dung, chairman of the Business Association of HCM City's District 8, said the resolution was issued to provide a number of solutions to relieve problems associated with business production, market support and bad debts.

Representatives of Maseco, Gia Dinh Textile and Garment and Sai Gon 3 Garment Joint Stock Co all agreed that the new resolution would create problems for them.

Le Chi Hieu, deputy chairman of the HCM City Real Estate Association, said the Ministry of Finance, which has implemented guidelines on the resolution via Circular 16, should revise the maximum turnover figure of VND20 billion.

He said the figure was too small because the dong had been devalued.

Business expectations

Speaking at the meeting, Van Duc Muoi, chairman of the HCM City Food and Foodstuff Association (Vissan), said there should be more value-added tax reductions and payment exemptions because enterprises were still mired in debts.

This would stimulate consumer demand, reduce inventories and increase business competitiveness, he added.

Muoi also said that lending rates were too high. Most companies were relying on their own resources to survive, waiting for a brighter day in the future.

Tran Viet Anh, vice chairman of the HCM City Rubber and Plastics Association, said many companies had closed last year and existing ones were still short of capital.

Company representatives at the meeting also complained about high interest rates as well as cumbersome bank-loan procedures.

However, Nguyen Tien Quang, director of Phu Tho Branch's Vietcombank in District 10, said his bank had offered three support packages with preferential interest rates for SMEs.

They include a VND30 trillion ($1.44 billion) loan at an interest rate of 7.5-8 per cent, a loan worth $700 million with an interest rate of 3.8 per cent, and another at VND5 trillion ($240.3 million) with an interest rate of 11 per cent.

The interest rate at Vietcombank for short-term loans is 12-12.5 per cent, and for medium- and long-term loans 13 per cent per year.

Source: VNS