Banks refuse to lend, businessmen becoming unemployed

Published: 19/05/2011 05:00



The loan interest rates are still sky high, while banks are restricting lending. The current difficulties have forced many small businessmen to become unwillingly unemployed.

The businessmen – redundant

Truong, the owner of a company which specializes in designing and building residential houses headquartered in district 3 in HCM City, told his friend that he has purchased a used Mercedes C200 which will replace the current Sirius. The friend congratulated Truong on the car purchase, saying that this is really the good news that Truong can prosper and purchase a car in the current difficult circumstances.

“You should not say congratulations!” Truong interrupted the friend. “I purchase car because I have no job to do now, except to take care for my family”.

The overly high interest rates have made his products unsalable, while his clients all have decided to halt their projects. As a result, Truong’s Company does not get any orders at this moment. He has decided to give back the leased office in district 3 and set up his office at his home in district 7.

All the workers of Truong’s company have resigned their jobs, and Truong now is the only worker of the company, who is also the director. Sometimes Truong still receives some small orders from loyal clients, and Truong transferred the job to a relative. He really does nothing now.

Truong related that after more than 20 years of working, he has saved enough money to build a house in district 7 and set up a small business. Previously, he was so busy that he did not have time to take care for the family.

“However, I have found out since 2009, that my money has been going away,” he said.

In 2010, he had to sell an apartment in district 7 to stop loss because of the unprofitable investment deal. He is also holding a lot of unsalable stocks because of the gloomy stock market.

“If I continue taking losses, I will never be able to own a Mercedes car. I once promised my wife that I would get a Mercedes car when I become 40 years old. But now I am over 40 already,” he said.

Ky, a friend of Truong’s, also the owner of a small business specializing in providing farm produce for export, has also halted his business. “What should I do now to earn the profits of 30 percent to cover bank loan interest rates?” he questioned.

“Businessmen do not fear they would get hungry. But we indulge in working and earning money. We do not want to sit idle,” he complained.

Difficulties becoming unbearable

Nguyen Anh Ket, Director of Thanh Ha Company, which specializes in making biological fertilizer, said he is not intending to borrow money from banks any more. “I will only keep production with the money I have. I have decided to scale down production, which helps ease the headaches for capital,” he said.

Ket added that the thing that makes him fearful most, is the credit contract, where banks stipulate that the lending interest rates are negotiable and that the banks have the right to change interest rates at certain moments.

“The interest rate has climbed to overly high levels. It would not be a surprise if a lot of businesses get bankrupted,” he said.

Doan Trong Ly, General Director of Aprocimex, a breeding and import-export company, complained that the input costs have increased by two folds in comparison with 2009. “Small businesses will be hard to survive,” he said.

Chair of the Vietnam Chamber of Commerce and Industry VCCI, Vu Tien Loc has cited a report by the Ministry of Planning and Investment, as saying that only 1/3 of enterprises can access bank loans.

Source: SGTT

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