Property, wood processing, mechanical manufacturing, electronics-information technology, apparel-footwear, and chemical-rubber-plastic are the industries currently struggling with difficulties in production and business in HCMC.
As the city-based companies are constantly running into troubles, more enterprises have gone bust or suspended production, said HCMC vice chairwoman Nguyen Thi Hong at the meeting between the municipal government and Deputy Prime Minister Vu Van Ninh on Monday.
Particularly, wood processors are coping with rising input material prices, together with high lending rates and surging labor costs and transport fees. Meanwhile, mechanical manufacturers are facing a harsh competition with foreign rivals, especially those from China.
Nguyen Van Tho, general director of Saigon Industry Corporation (CNS), told the meeting that more than ten affiliates under his company are having problems with capital access. However, the prevalent regulations disallow parent companies to assist their subsidiaries in borrowing capital, he stressed.
Difficult capital mobilization also lays down a burden on plastic enterprises, said the HCMC government. Like other industries, the plastic industry is struggling with a 10-15% higher input cost than late 2011.
Moreover, the environment protection tax applicable since the beginning of this year make plastic bag producers confused as the criteria on taxable products are ambiguous, leading to disagreement about taxation.
Property developers also find capital shortage a headache. Several real estate companies are unable to access bank loans or being imposed sky-high lending rates of 24-25% per annum.
Still, the greatest problem of the property market is the high volume of unsold products, which also affects producers of cement, steel and interior furnishing items, resulting in high rate of unemployment.
To help remove the difficulties for the city-based property firms, the HCMC government suggested that the central bank request commercial lenders to reassess repayment periods, and consider giving out loans to property developers with near-completion projects or those with highly efficient business plans.
Regarding tax policy, the municipal government asked for tax payment extension for small and medium-sized manufacturing enterprises in 2012. The city also sought a 30% corporate tax cut worth some VND768 billion for small and medium enterprises this year.
In addition, to relieve the financial burden for the city firms, the HCMC authority recommended the Government to allow enterprises to pay their tax arrears in installment prior to the year-end.
Enterprises are trying to restrain their product prices to simulate demand, but the recent fuel price hike actually deals a hard blow to them. As fuel prices have surged by a total VND3,000 per liter since the year’s beginning, it is likely that several items would mark up in the coming time.
According to the Vietnam Steel Association (VSA), transport fees make up 3-5% of steel production costs. VSA is evaluating the impact of the fuel price increase to recalculate prices of steel products sold to the market.