Vietnam’s national economy not likely to recover by 2013

Vietnam’s national economy not likely to recover by 2013

VietNamNet Bridge – The Vietnam Report Company on August 13 released the Policy Debate No. 2, a regular research survey, which shows that Vietnamese businessmen still keep pessimistic about the economy performance in 2013.

The main points of the reports

The moment for the Vietnam’s economy recovery remains indefinite. The majority of businesses keep optimistic about the business performance, while 46 percent of them believe the national economy would not be able to recover by 2013.

However, 44 percent of polled businesses said in favorable conditions, the national economy may begin recovering from the second half of 2013.

The number of businesses believing that the macroeconomic situation would be improved in the second half of 2012 was by far lower than the number of businesses believing that the situation would get worse.

However, most of the businesses have said they need to make tenacious efforts to survive and get ready to overcome the difficulties to come.

In the immediate time, businesses all anticipated that their business performance would be worse in the second half of 2012. The number of businesses predicting that their labor force and turnover would increase is much lower than the number of businesses anticipating the sharp falls in turnover.

Business restructuring has been recognized by 90 percent of businessmen as an inevitable tendency. Meanwhile, 37.74 percent of businessmen have said that they really want to restructure their business, but they do not have the labor force good enough for the work. Besides, the unpredictable economic changes also make businesses more cautious when making reshuffle decisions.

Regarding the big problems businesses are facing, the survey has found out that the credit flow to businesses has got stuck, leaving businesses in the capital thirst. The majority of businesses say banks only provide loans to big and profitable businesses (38 percent), or loyal clients (31 percent).

Businessmen think that commercial banks really want to support businesses, but many banks are facing difficulties themselves, thus unable to assist businesses.

Only a few businesses have criticized banks for ignoring businesses’difficulties and refusing to share difficulties with businesses.

What will be the national economy in 2013 like?

Businessmen still disagree when discussing the main targets Vietnam should strive to in the second half of 2012 and early 2013.

There are two different viewpoints about what Vietnam should do in the time to come, either to focus on rescuing the enterprises in difficulties, or gather strength to restructure the national economy.

Some businesses have urged to take necessary measures to rescue businesses, because if businesses collapse, the national economy would also be shaken. The businessmen believe that tax reduction, debt payment extension, low cost credit and the policies to encourage the real estate market need to be applied comprehensively to save enterprises.

Meanwhile, big enterprises believe that it’s the right time for the government to gather strength on the economy restructuring instead of spending money and time to rescue weak businesses.

They believe that it would be better to let unprofitable businesses, including state owned enterprises, go bankrupted, calling this the “creative devastation.”

Once the weak businesses are eliminated from the national economy, only strong and capable businesses would be able to exist and develop. After the devastation, new businesses would arise, while more new jobs would be created.

If the state continues pumping more capital to rescue the businesses, it would help prevent the collapse of the businesses. However, they would be weak businesses forever which live on the support from the state.



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