Recent fluctuations in the interest rates and the USD-VND exchange rate as well as increases in the price of oil, gas, and electricity have had a significant impact on production and business activities.

 Hai Tien Paper Joint Stock Company in Long Bien district, Hanoi said that it has six workshops with 300 workers, producing 5 million of products including booklets, notebooks and paper. According to the company’s director Tong Quang Huy, raw materials for the paper industry have increased by VND1 million per tonne along with the rise in the price of electricity, and petrol. Meanwhile, high interest rates and other fees being up to 20 percent have caused businesses many difficulties.

 To cope with the situation, the company must reduce production costs, and the consumption of materials, and use capital effectively. This can mean not investing in new machinery and equipment.

 Difficulties have also forced businesses to change production and business strategies, and offer stable prices to cope with tough competition in the market. Mr Pham Hong Viet, director of Hanoi Rubber Joint Stock Company said that apart from cutting production costs, working shifts should be arranged to avoid peak hours. As input costs rise, the prices of products must also increase. However, businesses should not raise prices of their products randomly as consumers must now reduce their spending to the minimum.

To solve the problem, Mr Viet said that businesses should accept lower profits to stabilize selling prices or increase the product price a reasonable amount to ensure the purchasing power of the local market. If businesses can do that, they will continue to survive and overcome their current difficulties.

 Today, more than 95 percent of Vietnam’s businesses are classified as small-and-medium-sized enterprises (SMEs) which play an important role in the national economy. However, these enterprises still face numerous obstacles regarding investment capital, human resources and technology.

 Only 30 percent of SMEs have access to official credit loans while the remainders have to borrow from banks with high interest rates. SMEs need more assistance from associations and sectors, especially policies from the Government to reduce taxes and lower interest rates.

 In such a difficult context, local businesses are calling for a healthy and equal competition environment. Dr. Cao Sy Kiem, Chairman of the Vietnam SME Association, said that the Government’s Resolution No. 11 on curbing inflation also defines measures to create a more favourable environment for businesses. “The Government’s measures on reduce taxes and combat inflation are aimed at helping businesses overcome their difficulties,” he added.

 Ministries, agencies and localities are implementing five types of measures including price management and business restructuring, to create a better business environment in the current situation, Dr Kiem elaborated.

 Economists said local businesses should be provided with updated information on State policies so that they can find their own direction. It is also essential to set up closer links among businesses to help them overcome obstacles and stabilise their operations.

(VOV) -