The reliance of Vietnamese small-and-medium-sized enterprises (SMEs) has tanked in the face of prolonged economic headwinds at home and overseas, Vietnam’s Ministry of Planning and Investment (MPI) said Saturday.
"The resilience of a part of enterprises, especially SMEs, has reached a critical level," it said in a report delivered at a regular cabinet meeting presided over by Prime Minister Pham Minh Chinh in Hanoi.
More pro-business policies are needed to ensure that the nation’s economic recovery proceeds as expected, the report said.
The report also struck several positive notes, saying the country’s July economic indicators were better than in June, with inflation under control and macroeconomic stability maintained.
Vietnam’s index of industrial production (IIP) increased by 3.9% in July against June and by 3.7% year-on-year. The number of newly-registered and re-opened enterprises in July was 20,800, up 34% from a year earlier.
The seven-month consumer price index (CPI) increased by 3.12% year-on-year, the MPI said, adding that the index’s growth continued a downward trend.
Interest rates for both deposits and loans decreased by 1% compared to the end of 2022. The country secured a trade surplus of around $16.5 billion in the first seven months, up 12 times year-on-year.
Enterprises in the country have been facing many challenges, most notably in terms of cash flow and administrative procedures, the report said. The sustained challenges posed by prolonged economic headwinds in the post-pandemic world created pressures on Vietnam’s growth and macroeconomic stability, it added.
Prime Minister Chinh said that the entire world has been facing a tough time. He noted that the world was facing food security issues as India, the world’s largest rice exporter, has halted exports of the train; the Black Sea grain deal has collapsed; and world oil prices have hit their peak since April.
The MPI report said that by the end of July, VN93,800 billion (over $3.95 billion) had been disbursed, accounting for more than a quarter of the VND350 trillion ($15.4 billion) post-pandemic stimulus package approved by the National Assembly for the 2022-2023 period.
Of this, 64% was used for reducing taxes, fees and charges; 20% as preferential loans through the Vietnam Bank for Social Policies; and the rest as support for housing rentals and interest rate subsidies.
The MPI proposed a number of growth support solutions including the improvement of institutional issues, removal of difficulties in doing business, drastic simplification of administrative procedures and further improvements in the investment environment.
Efforts should also be made to promote growth drivers like exports, domestic consumption and investments, the ministry said. Its report called for promotion of sustainable tourism, support for businesses in meeting export market standards, provision of non-tax incentives to attract FDI, promotion of public investment, and removal of obstacles for the ailing property market.