The policy "pie" is hard to grasp.

To support businesses in their post-pandemic recovery, agencies from the central to provincial levels have issued numerous decisions, directives, mechanisms, and policies. However, if these support policies remain merely on television and in the media without being implemented in practice, businesses will continue to face prolonged difficulties.

Production of building materials at Thanh Tam Production and Import-Export Co., Ltd. (Hoang Long Industrial Park, Thanh Hoa City). Photo: Minh Hang

Struggling with credit offers

Despite its reputation and years of experience in the market for school and residential furniture, Hong Duc Educational Equipment Joint Stock Company (Le Mon Industrial Park, Thanh Hoa City) has not been immune to the general market difficulties, experiencing a revenue decline of approximately 30% in 2023. In this context, the company is still accessing bank loans at relatively high interest rates, with some loans reaching 10.5%, only to be reduced to 9% in November 2023. Besides the minimal interest rate reductions received through direct negotiations and proposals with banks after interest rate adjustments by the State Bank of Vietnam, the company has not yet benefited from any specific interest rate support policies. According to the company representative, banks also seem reluctant to guide businesses in utilizing these policies. Could it be that not only businesses but also banks themselves are hesitant and concerned about complying with regulations regarding procedures, documentation, and post-audit processes?

It can be said that over the past two years, monetary policy has been one of the policies that the State has focused on and directed decisively. Many banks have also actively launched preferential credit packages to "rescue" businesses. However, the situation where banks have excess money but businesses are "starved" for capital is causing headaches for managers. According to data from the State Bank of Vietnam - Thanh Hoa Branch, the province currently has 27,000 businesses, but only 4,686 have credit relationships with banks. Thus, only 17.3% of businesses are able to absorb capital at present, reflecting a weak picture of cash flow in production and business. Furthermore, with outstanding loans of VND 52,130 billion to 4,686 corporate customers, the number of customers whose debts were restructured in 2023 was only 266, with a restructured debt value of VND 1,274 billion, which is a very small number.

Mr. Nguyen Van Thanh, Chairman of the Thanh Hoa City Business Association, frankly expressed his opinion: "Although interest rates have decreased, they are still high and beyond the capacity of businesses to bear, as well as the potential profits to be achieved in production and business. In particular, the valuation of collateral assets is not yet close to market prices, preventing banks and businesses from finding common ground."

In particular, to support businesses, cooperatives, and individual households in restoring production and business activities, many interest rate support packages from the State budget have been issued, but most have been "stuck" in terms of disbursement. A typical example is the 2%/year interest rate support package from the State budget through commercial banks under Government Decree 31/2022/ND-CP, amounting to 40,000 billion VND. However, after nearly two years of implementation, only 1,400 billion VND (equivalent to 3.5%) has been disbursed nationwide.

In Thanh Hoa province, according to data from the State Bank of Vietnam - Thanh Hoa Branch, over 19 months of implementing this policy (from May 20, 2022 to December 31, 2023), only 208 customers accessed the interest rate support package with outstanding loans of VND 1,343 billion and interest rate support amounted to VND 17.5 billion. This figure is still too low compared to the actual capital needs of businesses, cooperatives, and business households in the province and has not met expectations when the program was implemented.

Mr. Cao Tien Doan, Chairman of the Thanh Hoa Business Association, stated: "The reason businesses find it so difficult to access this policy is because it comes with too many conditions that are not suitable for them. In particular, both banks and businesses are very hesitant to implement and benefit from the policy due to confusion in defining the criteria for what constitutes a 'business with the potential for recovery'?"

The business community hopes that in the coming period, the State Bank of Vietnam will be more vigilant, issuing guidance, directives, and supervision to ensure that local commercial banks strictly implement debt restructuring, deferral, and interest payment extensions in accordance with the Government's directives. Along with this, the Government needs to boldly implement breakthrough solutions, remove bottlenecks, and enact truly feasible policies to support capital access and overcome the slow implementation of support policies seen recently.

Many policies remain... on paper.

The locality is considered to have taken decisive action to create a favorable environment and diversify support policies for businesses. However, most of these support policies have not yet achieved the desired results.

In accordance with Government Decree 12/2023/ND-CP dated April 14, 2023, Thanh Hoa province extended the payment deadlines for value-added tax, corporate income tax, personal income tax, and land rent totaling VND 1,227.8 billion in 2023. This included extending the deadline for VND 622 billion in value-added tax for 1,602 businesses; extending the deadline for corporate income tax for 1,489 businesses with VND 548 billion; and extending the deadline for land rent for 395 businesses with VND 57.8 billion. In addition, the province implemented policies to exempt and reduce land and water surface lease taxes totaling VND 360 billion; wrote off tax debts for 1,163 businesses with over VND 98 billion; and canceled tax debts for 983 businesses with over VND 35.7 billion.

For example, Resolution No. 214/2022/NQ-HĐND, dated April 13, 2022, of the Provincial People's Council (Resolution 214) on the promulgation of policies to support business development in Thanh Hoa province for the period 2022-2026 includes 7 policies to support businesses: Financial support for training in business startup and management; financial support for delivering the results of administrative procedures for business registration; financial support for the use of digital signatures; support for connecting, sharing information, promoting, and introducing business products on the digital platforms of state administrative agencies in Thanh Hoa province; financial support for consulting on digital transformation and application of digital technology; support for businesses to expand their markets; and support for in-depth consulting for export businesses to access new export markets. However, after two years of implementation, practical policies aimed at encouraging, increasing confidence, and supporting business recovery have not been disbursed.

In 2023, the policy to support businesses under Resolution 214 allocated nearly 15 billion VND; including 2.5 billion VND for in-depth consulting support for export businesses to access new export markets; 3.5 billion VND for supporting the use of digital signatures; over 2.4 billion VND for funding consulting on digital transformation and the application of digital technology; over 2.7 billion VND for training on business startup knowledge; over 2.9 billion VND for training on business management knowledge; 550 million VND to support businesses in expanding their product markets; 268 million VND to support the delivery of results of administrative procedures for business registration; and 90 million VND for printing and providing free handbooks on the procedures for business registration, online business registration processes, and some business support policies.

However, according to data published by the Steering Committee for Enterprise Development, in addition to supporting 77 training courses on business startup and 77 training courses on business management, achieving 100% of the plan, along with some non-essential contents such as: a handbook guiding the procedures for business registration, free delivery of administrative procedure results... some policies are not feasible to implement; especially policies such as supporting in-depth consulting for export businesses to access new export markets, policies supporting businesses to expand their product consumption markets; policies supporting funding for consulting on digital transformation and application of digital technology... after two years of implementation, no businesses have registered or met the eligibility criteria to benefit.

According to the Department of Industry and Trade, the period from 2022 to the present, coinciding with the implementation of the policy, has been the most difficult time for export activities. New markets such as the US and EU, which are key markets for businesses in the province, are also suffering from severe inflation, leading to reduced orders, let alone the opening of new ones. In the current difficult context, many businesses are making efforts to diversify their markets to some Asian countries, but mainly with small orders. Therefore, in the past two years, no businesses have applied to benefit from this policy.

In addition, businesses also noted that the conditions for benefiting from the policy are not easy, as businesses must meet the requirement of having orders with a minimum turnover of 300,000 USD.

Regarding the support for businesses to expand their markets and provide funding for digital transformation and the application of digital technology, according to the Department of Finance, the reason for the difficulty in disbursing funds is due to the eligibility criteria and procedures stipulated in Government Decree No. 80/2021/ND-CP dated August 26, 2021, which details and guides the implementation of several articles of the Law on Supporting Small and Medium-Sized Enterprises. However, the Ministry of Finance has not yet issued a document guiding the mechanism for using state budget funds for recurrent expenditures to support small and medium-sized enterprises as stipulated in the decree, so the units assigned to lead the program lack a basis for implementation.

Another ineffective business support policy is the policy to encourage the development of industry and small-scale handicrafts in Thanh Hoa province for the period 2022-2026, issued under Resolution 121/2021/NQ-HĐND. A key feature of this policy is that businesses receive one-time financial support to invest in land leveling and the construction of technical infrastructure serving industrial clusters, with a funding level of 1 billion VND/hectare for districts under Decree 30a; 0.7 billion VND for other mountainous districts; and 0.5 billion VND/hectare for lowland and coastal districts. After three years of implementation, the policy has yet to find a beneficiary.

The reason the policy has failed to disburse funds is because it does not meet the condition that "the project has commenced production on the land area leased from the State." In reality, with overlapping legal procedures in investment and difficulties in land clearance, businesses have to spend a very long time to complete construction procedures and bring projects into operation. Even after the policy's validity period expires, the project may still not meet the eligibility criteria. After three years without any eligible recipients, the policy is deemed unfeasible, and the Department of Finance is proposing to consider discontinuing its implementation.

According to the Vietnam Federation of Commerce and Industry - Thanh Hoa - Ninh Binh Branch, the most important reason why businesses are unable to qualify for the policy is their weak financial health. In addition, the lack of effective communication and policy implementation, primarily through conferences, cannot be ruled out. Therefore, even if businesses hear about the policy, they often remain largely unaware and don't know where to begin if they wish to benefit.

Ms. Nguyen Thi Mai, Director of Sao Mai Trading and Import-Export Joint Stock Company (Thanh Hoa City), commented: “Currently, most policies supporting businesses remain on paper; businesses are largely unable to access them. Policies are created for implementation, but in reality, they are only issued to the offices of departments and agencies. Those who are supposed to be implementing the policies often don't even know about their existence. Or, even if they do know, they don't know how to access them.”

Nguyen Huu Minh, Director of Vietnam Agricultural and Medicinal Plant Development Joint Stock Company (Thach Thanh), shared: “There is a need to invest in and innovate medicinal plant production technology to enhance the value of lemongrass as a raw material. In 2023, I also researched and approached policies in this field, but I was truly overwhelmed because the policies, regulations, procedures, and application documents were very complicated, with guidance simply going from one decree to another, not to mention the sub-legal documents, which really discouraged us and made us give up.”

Minh Hang

Final article: The "revolution" of self-renewal.

Source: https://baothanhhoa.vn/kinh-te/doanh-nghiep-sau-bao-dich-bai-2-mieng-banh-chinh-sach-kho-cam/205740.htm