Businesses are facing pressure to pay debt

Enterprises face many difficulties in production, market, and debts. Illustration

Many businesses are having to "sell themselves" to pay their debts. For example, the poultry industry has continuously "called for help" from the management agency to control smuggled poultry in the context of reduced consumer demand and increased input costs, causing livestock businesses and households to increase farming to fall into a loss situation. Some businesses said that the selling price of chicken meat has fallen from 57,000 to 58,000 VND/kg to only 47,000 VND/kg, even in a period down to 35,000 VND/kg, while the cost of raw materials for animal feed too high, accompanied by interest on bank loans, transportation costs, intermediaries, etc., so it "eroded" profits, causing this enterprise to have to sell two factories for nearly VND 80 billion to cover losses. If this situation lasts for another six months, the business may go bankrupt.

In addition, according to experts, many businesses are having to sell off assets to reduce the burden of interest on bank loans because the implementation of the debt extension policy and debt structure has not been effective. Additionally, many businesses do not have enough finance to repay their debts, so they have to assign debts and accept to use collateral to repay bank loans. Currently, on the websites of many commercial banks, notices of the auction of collaterals for debt recovery are continuously posted. However, many properties are listed for sale many times. The starting price is also lowered but "sluggish".

For example, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) - Long Bien Hanoi Branch announced a plan to auction debts of Phu Minh Chau Import-Export and Trading Joint Stock Company and Phu Minh Chau Commercial Joint Stock Company Tri Duc Construction Investment Joint Stock Company. Auctioned assets include all principal and interest balances, and fees incurred up to the time of debt trading up to March 15, 2023, are more than VND 543 billion. Previously, BIDV Hai Phong announced the auction of the 17th Vietnam Japan Steel Joint Stock Company debt. The total outstanding balance of the debt as of May 23, 2022, is VND 447 billion.

Similarly, Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has just announced the 13th sale of secured debt of Phuong Nam Nhi Construction, Trading and Service Co., Ltd. VietinBank offers a starting price of VND 20.3 billion, only 22% of the debt value (as of May 14, 2023, it is VND 93.5 billion), this starting price is even lower than the principal balance (24). ,7 billion dong). Agribank also announced the sale of a debt of more than VND 124 billion of Phuong Thanh Cong Investment - Trade - Service Co., Ltd. with collateral as a series of real estate in Binh Duong...

Not only repaying debt and covering expenses, but many businesses also fall into difficulties due to the maturity of bonds. Recently, Thai Tuan Group Joint Stock Company met with bondholders to approve the adjustment of the selling price of security assets which are land use rights and assets, from VND 135 billion to VND 75 billion. Currently, the enterprise is late in repaying the debt of 800 billion VND. Similarly, An Giang Import-Export Joint Stock Company (Angimex) plans to sell the collateral to fulfil its obligations to bondholders. In addition, this year, Angimex plans to sell a series of assets, including significant assets such as the Da Phuoc Rice Processing Factory and Dong Thap Food Processing Factory.

Thus, businesses face many difficulties for objective and subjective reasons. Therefore, in the recent business situation survey by the Vietnam Confederation of Trade and Industry (VCCI), only 35% of private enterprises and 33% of foreign direct investment (FDI) enterprises have plans to expand production and business within the next two years. These are low numbers during the eighteen years of VCCI's annual business survey.

According to experts, it is normal for businesses to sell part of their assets to pay their debts. In the long term, businesses have to sell assets or even sell all of their assets enterprises for foreign partners, which may create risks of loss of safety and economic security.

Commenting on the above situation, Assoc.Prof.Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics, acknowledged that domestic enterprises are in decline, so the support needs to be accelerated and more robust. Recently, the State Bank has taken supportive actions to reduce lending interest rates, but more importantly, it is necessary to reduce lending procedures and processes. Similarly, Mr Nguyen Cuong, Vice Chairman of Bac Giang Business Association, said management agencies must focus on solving business difficulties and obstacles in administrative procedures, investment and land construction, fire prevention, access to capital...