VietNamNet Bridge – Viet Nam's economic outlook is better than in previous years. Cao Sy Kiem, president of the Viet Nam Small and Medium Sized Enterprises Association, spoke with the Viet Nam Economic Times.

In January, the industrial production index rose by only about three per cent compared with the same period last year. Why was this?

Difficulties facing small and medium enterprises (SMEs) in 2013 are still lingering into the new year. One month is too short for enterprises to develop steam for better production.

Production and consumption of commodities remain sluggish while enterprises that are on the verge of bankruptcy or are scaling down production are still hanging on for various reasons.

Many companies are facing bad debts, locking enterprises and banks into a stalemate. Although, in 2013, the Government adopted many measures to lessen difficulties for enterprises, the results were not up to our expectations.

A huge volume of products has piled up in warehouses due to low consumption. As a result, a vicious circle appeared, affecting the business circle and the banks. This had led to bad debts. However, against the 2013 economic background, I'm confident that this year's economic picture will be brighter.

That means you've seen a light at the end of the tunnel?

Yes! Not only me, the business community also agrees with my confidence. In his new year message, Prime Minister Nguyen Tan Dung laid stress on the important role of the ownership rights of the people and enterprises in the nation's economic development.

He expressed his confidence that the strong institutional restructuring would serve as a level to give a push to the business community to restore their production. State-owned enterprises and SMEs should be treated equally. This is essential to help them adopt a pro-active attitude.

Fairness between all economic entities will breed healthy competition and help them erase past differences and rectify weaknesses. If these conditions are met, no doubt we'll be able to overcome the present difficulties and challenges.

I also think that lessons learned in 2013 will help enterprises confidently deal with the challenges they face. In addition, news from the macro economy should serve as a driving force for Vietnamese enterprises to recuperate.

Development orientations and measures adopted by the Government in 2013 continue to help solve some of the bottlenecks in the national economy, particularly the bad-debt problem and balancing supply and demand.

A bright picture of the 2014 economy will act as a prerequisite for our economic development in 2015 and the following year.

I don't think there will be major breakthroughs in the 2014 economy, however, I'm confident the bright spots will overshadow the black spots.

Do you think the Government should continue to support the business community?

The Government should support enterprises through specific mechanisms or policies while avoiding deep interferences in the market that may have negative impacts on their production. The Government should provide favourable conditions for enterprises to access credit to restore production.

Although in 2013, the official yearly interest rate set by the State Bank of Viet Nam was between 7-9 per cent, there were not many enterprises taking advantage of the low rates.

One of the Government's resolutions this year is to step up the equitisation of State owned enterprises (SOEs). Do you think the programme will be carried out according to plan?

Prime Minister Nguyen Tan Dung has set a target to equitise about 500 State groups and Corporations from now till the end of 2015.

Structural reform of the SOEs, including corporations, began years ago. However, the results are limited. One of the key objectives of the reforms is to gradually reduce preferential policies and monopolies given to SOEs so that they will use State capital much more efficiently.

All in all, serious structural reform is an effective level to help the national economy to escape sluggishness not only this year and in following years.

Source: VNS