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KINHBAC CITY DEVELOPMENT

HOLDING CORPORATION

“Enterprise communities raise unfair thought and behaviors”, said Mr. Dang Thanh Tam – Chairman of the Board of KBC

“Many economists, domestic investors and international investors and I have the same identification that in spite of difficulties but the economy will grow strongly in 2017, especially the stock market will  grow impressively and sustainably more than before” 

 

Mr.  Dang Thanh Tam, Chairman of the Board of Kinh Bac City Development Holding Corporation (KBC)

Enterprises never are paid attention to as present

2016 was the first year of the 5 year plan (2016 – 2020), and the first year of the new term of the Central Committee of the Communist Party of Viet Nam and the agencies from the Government to Parliament.

The first time in Parliament, the title of chairman of National Assembly, President, Prime Minister, Chief of the Supreme People's Court have taken the declaration ritual under the new Constitution. Content of declaration is very emphasis and full of spirits which brings the whole peoples with a new hope.

In fact, we have seen many prominent signal from the head of the Government to the ministries, devisions and localities, a movement of particular attention to the enterprise community to overcome difficulties, create a healthy business environment, supporting enterprises to boost business and production, thereby promoting economic growth.

Firstly, there are a lot of laws beginning being pratised in life with advancement and more transparency. Secondly,  the specific policies of the government and ministries and devisions bring the open spirit and to create better conditions for business environment.

In summary by a sentence, due to the policies and thinking of Government, it has been never paid attention to and hoped as present.

The procedure of policy practice should be improved

Policies of the Party and State are coherent to creat the healthy, fair business environment and support the business to develop. However, when estalishing law, we still do the old way so that the law is general and must waits for the decrees of Government and circulars of Ministries, Divisions for instruction. Therefore, a lot of new policies have not go in practice.

On the other hand, the implementation of guidelines and policies are not always transparent and fair between businesses. For example, enterprises of all economic sectors which have large, medium and small scale are not currently accessible to resources equitably and transparently 

from accessing to land and capital; or there is a situation the enterprise is extended for loan while the other is foreclosed.

Actually, past 10 years is a more difficult period. The difficulties contribute to the general awareness and understanding of the society for economic activity better, but at the same time no less negative, distorting the business environment.

Even in the business community it also appears unfair thoughts and behavior when a large part of business only to solve the problem in short-term without considering in long term, contributing to rise and develop negative.

Many enterprises are still deep in debt

In 2016, policies and especially the spirit of the Government hope to build a healthy business environment. Many specific policies, many moves and powerful and decisive speech of leadership of State and Government have helped businesses be peace of mind, engross in manufacturing and doing business. Thus, the economy gradually recovers, develops healthily. In particular, the Government thoroughly save and use capital and spend money more efficiently, not abuse for massive bond issue.

Therefore, even in more adverse effects from drought, natural disasters, economic development and world politic development, we still maintain economic growth and stabalize currency, keep sustain inflation at target, as well as increase export and foreign currency balance.

However, our economy still has a lot of difficulty. It has just been recovered from the difficulty, so that it can not be  "healthy" immediately. Many businesses have recovered but not less businesses are deep in debt. The main reason was from interest rate which was too high while the economy has led to unfavorable changes that caused in inefficient operation of enterprises, which led to insolvency for years.

Whatever enterprises were rescheduled and expanded for debt but principal and interest debt were heaped up that caused businesses much weak and unqualified for a new loan in order to restore and boost production. As the forecast, this situation can have few more years to stabilize and business can be recovered from debts. Businesses is healthy gradually, bad debts is gradually decreased and the banking system will be healthier and healthier accordingly.

In fact, debtness has both subjective reasons from businesses’ investment spread, lack of focus that  is inefficient. The objective reasons are from lack of consistent policies. For example, the real estate market is active but it is applied  for "tightening" of lending till the market declines, it is applied for "open" policy; Or, there was the period of too strong monetary tightening  policy that caused  liquidity shortage in the banking system, many banks raised interest rates over the rate ceiling and additional interest payments, leading to higher interest rates that is too unbearable for enterprises. 

Pressure from integration shall help enterprises become more mature

Pressure from the deeper integration with its increasing challenges is one of the primary reasons for debts and ineffective operations of enterprises. Deeper integration, however, is inevitable and cannot go backwards. The key is to prepare to overcome challenges and seize opportunities. Integration not only helps enterprises fall in line with the beat of the world, but also makes the economy bustle in breath of the world economy. Vietnam enterprises will be gradually more mature.

It is not hard to see the impacts of integration. For instance, the US presidential elections of many years ago impacted just a little to the economy of our country, but the recent one has created a great deal of “waves”. Only the intention to withdraw US from Trans-Pacific Partnership (TPP) of the US president- Donald Trump can cause enormous influences on the stock market and currency market of Vietnam. In addition, many enterprises has shown their concerns since the US market is the largest good exporter in Vietnam.

In my point of view, if Donald Trump is indifferent to TPP, the policies after taking office of President will also not let Chinese goods flood in the US massively. Specifically, if Mr. Trump still keeps the opinion of withdrawing from TPP, he will also hold the view of applying high tax on Chinese imported goods. Accordingly, Vietnam shall get disadvantaged due to US’s withdrawal from TPP, but indirectly have benefits when the Chinese goods are taxed higher than in the US.

I believe that the US market will still open for goods originated from Vietnam. As a result, Vietnam will continue to attract investment from oversea. This is not only one of important factors for economic growth, but also conditions for the increase of export to the US and other countries as we have lately signed the trade agreements with the European Union, Korea, Russia, Belarus, etc.

The Economy shall grow up

Vietnam will continue to integrate deeper into the world economy, taking advantage of opportunities, while we still have various advantages for development. Therefore, I believe that Vietnam's economy shall grow up strongly in 2017. Besides, additional economic policies shall come to live of small and medium-sized enterprises in order to access better to capital resources and other resources.

In terms of enterprises, since loan time is too short nowadays, enterprises are always in condition of repaying. Hence, needed and important policy for enterprises is that banks should have long-term borrowing policy from 7 years to 10 years, instead of 5 years as at present. That is because 5 years passes quickly, while many projects may not repay during this time.

At the same time, loan policies without basing on mortgage should be given. Small and medium-sized enterprises should be paid special attention in accessing to bank loans.

In addition, economic policies should be long-term and consistent, avoid sudden changes that unable enterprise to keep up with.

Last but not least, focusing on the development of stock market becomes the main channel for capital mobilization of enterprises, especially the large ones. As a consequence, bank capital resource will come widely to small and medium-sized enterprises. Developed enterprises will contribute to the sustainable development of the economy.

 

KBC's Chairman

Mr. DANG THANH TAM

Chairman

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