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Vietnamese SMEs face cash flow problems amid Covid-19

Many Vietnamese small- and medium-sized enterprises (SMEs) are facing cash flow problems triggered by the ongoing Covid-19 pandemic, stated a survey by the Vietnam Chamber of Commerce and Industry (VCCI).


Workers of a small business run a wood processing line. Local SMEs are facing cash flow problems amid the Covid-19 pandemic - PHOTO: VNA


According to the survey, some 85% of SMEs have scaled down their market, resulting in 60% of firms facing cash flow issues. Further, only 50% of businesses can maintain their operations for another six months, while 30% can survive for only three months.

Meanwhile, the Association of Chartered Certified Accountants noted in a recent study that the most severe impact of the pandemic is the lack of cash flow among businesses. In Vietnam, 47% of enterprises are facing cash flow problems as their customers have stopped or reduced purchases.

Speaking to Vietnamplus website, Hagimex’s General Director Nguyen Tien Anh pointed out that the United States, Europe and South Korea are the firm’s main markets.

The company runs a closed production chain from developing materials, to making purchases, handling production and selling directly to foreign importers. However, the Covid-19 epidemic has cost the firm a number of clients in South Korea and Europe and negatively affected the entire supply chain, resulting in a 30% decline in its target revenue.

The post-Covid 19 market is largely unpredictable. Hagimex may suffer further losses, while the budget for wage payments and new investment may be hurt, Anh stressed.

Nguyen Khanh Tung, director of KC Ha Tinh Company, acknowledged that the firm is struggling as its supply chain has been disrupted. As such, the company is seeking new orders, hoping to resume production in the next few months.

In the meantime, the company still has to pay regular expenses, with a major part being spent on the depreciation of the factory’s assets. Besides this, it has to pay bank interest of VND700-800 million each month, Tung remarked.

Recently, the Vietnam Association of Seafood Exporters and Producers (VASEP) sent a petition to the Ministry of Planning and Investment, reporting that most businesses in the industry have encountered financial problems due to the pandemic. Their export earnings have dropped sharply, so some firms cannot pay their bank interest.

VASEP members also pointed out that bank interest rates are still high, even though the Government has ordered local lenders to cut interest rates and service fees to support virus-hit companies. SGT

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