Many businesses have ceased operations.

In the first seven months of the year, difficulties in accessing bank capital, high borrowing interest rates, and escalating prices of materials and equipment have pushed numerous businesses in Nghe An province into difficulties and forced them to cease operations.

According to data reported by the Nghe An Tax Department, in the first six months of 2011, 25 businesses in the province temporarily suspended operations, and 387 businesses closed or temporarily closed their tax identification numbers and ceased operations.

These figures are alarming. Businesses are the key source of revenue for the state budget; when businesses are underdeveloped, revenue weakens, leading to negative social consequences. Currently, most businesses in our province are small and medium-sized enterprises (SMEs), lacking capital for production and business investment. However, due to current bank regulations limiting loan limits, most SMEs cannot access medium- and long-term loans. Furthermore, with interest rates currently ranging from 20-28% per year, many businesses struggle to repay interest even after securing funding.

Wood production and processing at Song Thang Enterprise (Nghi Phu Small Industrial Park - Vinh City).

A representative from Dong Duong Mechanical Joint Stock Company stated: "As a small business specializing in gas trading, we cannot obtain loans from banks and have to borrow from the open market at exorbitant interest rates. Currently, the company has a loan of 400 million VND, with monthly interest payments alone amounting to 32 million VND, plus 6.5 million VND per month for stall rent and worker salaries... The company is trying its best to manage its finances, but it can only barely cover the interest payments."

Ms. Pham Thi Hong Thai, Chairwoman of the Nghe An Small and Medium-Sized Enterprise Association, stated: Small and medium-sized enterprises (SMEs) in Nghe An province account for 98% of the total number of businesses in the area, including state-owned enterprises, joint-stock companies, limited liability companies, private enterprises, cooperatives, and household businesses. Currently, these businesses are struggling due to high loan interest rates and production stagnation. In addition, the continuous increase in prices of gasoline, electricity, and coal has driven up input costs, making it difficult to sell products and goods, leading to significant inventory buildup and greatly impacting the finances of businesses. Many businesses are unable to pay taxes to the State, repay bank loans, and pay employee wages. Many workers are quitting or taking temporary leave, forcing businesses to worry about retaining employees. These numerous difficulties have forced many businesses in the province to scale down production and business operations, temporarily suspend operations, or transfer part of their ownership to survive. It's not just the business community in Nghe An that's facing difficulties. Looking at neighboring provinces like Hai Phong – a vibrant industrial and port city – nearly 30% of businesses have stalled production and are at risk of bankruptcy. In Ninh Binh province, up to 90% of businesses are operating at a reduced capacity, waiting for better opportunities...

In July 2011, at the Conference of Key Officials of the Vietnam Association of Small and Medium Enterprises (SMEs) held in Cua Lo Town, Mr. Cao Sy Kiem, in his capacity as Chairman of the Association, stated that in the coming period, the Association will report to the State on the situation of SMEs; focusing on supporting provincial and city business associations on issues such as providing market information, technology, trade and investment promotion, and coordinating consulting and support activities for businesses. This will help businesses protect their rights. He emphasized that in this difficult situation, the internal efforts of businesses are crucial. Businesses must strive to identify immediate benefits, but always consider the long-term implications to prepare the necessary elements so that when the economy overcomes difficulties, it will have a path to strong development. For example, issues such as technological innovation, human resource training, and restructuring organizational operations to maximize resources and overcome difficulties as quickly as possible for each enterprise...

I believe that, in this period, to help businesses gradually overcome difficulties, a credit guarantee fund for small and medium-sized enterprises (SMEs) should be established. This would give businesses the opportunity to access low-interest loans, ensuring that capital truly reaches SMEs. Simultaneously, there should be mechanisms to reduce certain taxes for businesses, such as partially exempting corporate income tax for 2011 and carrying it over to 2012. Other taxes, such as VAT on specific items (e.g., VAT on fertilizers), and especially land tax under Decree 121/ND-CP, should be reduced and deferred in subsequent years. Businesses themselves must also take steps to save themselves. With current high interest rates exceeding 20% ​​per year, businesses should carefully consider how to use capital most effectively, produce goods that are well-received by the market, and ensure quick sales and capital turnover for reinvestment in production. Minimizing all production costs to lower product prices and remain competitive in the market... Such solutions can help businesses overcome this crisis.

Quynh Lan