Businesses manage to relieve cash flow pressure

Enterprises are trying to overcome difficulties to stabilize production and business activities. Photo: T.D

Businesses face with difficulties

According to experts, in 2024, the economic difficulties will continue to last. Besides the internal problems of the economy, global economic instability will likely continue and affect Vietnam's economy.

The recently published business survey report of Vietnam Assessment Report Joint Stock Company (Vietnam Report) shows that in 2024, the overall picture is still covered in gray and cannot be eliminated overnight. Because the world economy is not in recession, growth is slowing down, or international trade has reduced growth momentum. In particular, the pressure on bonds maturing in 2024 is still huge. The total maturity value is up to nearly VND 279,219 billion, of which the majority is real estate bonds with VND 115,663 billion, equivalent to 41.4%. This can increase liquidity pressure for businesses, create financial pressure and affect restructuring as well as business plans.

The problem of accessing capital is also an obstacle that businesses are facing, especially small and medium enterprises. The results of a business survey by the Private Economic Development Research Board (Division IV) in January 2024 show that it is true that businesses are exhausted. Although orders are starting to improve, businesses' ability to access capital in 2024 is still at a worrying level.

In Ho Chi Minh City, through a survey implemented by the Ho Chi Minh City Business Association (HUBA), up to 41% of businesses no longer have enough legal collateral to borrow capital. Meanwhile, the valuation of agricultural land assets is very low, annual leased land assets cannot be mortgaged, and other assets are priced down when inflation increases. Therefore, HUBA recommends that banks should consider mortgage rates and expand lending according to contracts with assets and property rights formed in the future.

From business reality, Mr. Vo Minh Hau, Director of Thanh Hoa Garment Company (Thu Duc City) said that the company is planning to close the factory due to lack of capital. For two consecutive years, the business had no orders but still held on, borrowing from banks to pay workers' salaries. The company rotates payments with banks to avoid bad debt. Now it has orders again but lacks capital. Currently, the business wants to borrow more, but the bank shakes its head because the old debt is still there and there is no collateral...

Businesses are optimistic

Besides the difficulties and challenges, experts also point out positive points of the economy when policies to remove difficulties for production and business, promote growth and stabilize the macroeconomy are being implemented by the Government, ministries, branches and localities are highly focused.

At the same time, the level of optimism among businesses has somewhat improved. Enterprises’ optimism can create a positive virtuous cycle, accompanied by a willingness to face challenges and seek opportunities in every situation, demonstrating the company's confidence and adaptability in difficult business environments.

According to records from a number of businesses in the real estate sector, despite still facing difficulties, especially in terms of capital, many businesses have made efforts to gradually or completely erase outstanding bond debt with the desire to clean your financial balance sheet before being eligible to access bank credit in the context of current low interest rates.

For example, Dat Xanh Group Joint Stock Company has completed the offering of more than 101 million shares to existing shareholders at a price of VND 12,000/share, equivalent to a total value of capital raised of more than VND 1,220 billion. Thereby, the charter capital was increased from more than VND 6,207 billion to more than VND 7,224 billion. With the money raised, Dat Xanh used VND 210.5 billion to supplement capital for Hoi An Invest Joint Stock Company to pay bond debt, VND 688 billion to supplement capital for Construction - Trading - Service Company Limited. Ha Thuan Hung case to repay loans from credit institutions; VND 220 billion to pay taxes and other payables to the State of Ha An Real Estate Company (these are members of the Dat Xanh ecosystem). With nearly VND 102 billion remaining, Dat Xanh used it to pay taxes and other payables to the State as well as the Group's operating expenses.

Similarly, in early January 2024, Nova Real Estate Investment Group Joint Stock Company - Novaland announced a plan to issue an additional 1.37 billion individual shares to existing shareholders and employees (ESOP) in 2022 and 2023. Regarding individual stocks, Novaland will offer a maximum of 200 million shares to no more than 5 professional investors and will be restricted from trading for 1 year from the date of completion of the offering. For existing shareholders, Novaland will issue a maximum of 1.17 billion shares with no trading restrictions.

With the proceeds, Novaland will contribute more capital to member companies to restructure debt and pay due debts while also prioritizing salary payments to employees. If implemented successfully, Novaland is expected to earn about USD 500 million.