VietNamNet Bridge – The higher dollar price plus the
electricity and petrol price increases have made information technology (IT)
firms, especially small and medium companies, worried stiff.

IT firms
once experienced a difficult period in 2008 and 2009 when the global economic
crisis broke out. At that time, many international technology groups cut down
contracts on outsourcing software to Vietnamese companies, while enterprises
cut down the budget on technologies. As a result, Vietnamese IT firms have to
return to seek opportunities on the domestic market.

2010 is
also expected to be a difficult year for IT firms, since the dong has been
devaluated sharply, while the electricity and petrol price have increased at
the same time.

Small
companies will have to go through many hardships

Experts
have pointed out that small and medium companies with weak resistance will be
the ones who suffer most, because they find it difficult to access loans,
maintain stable operation and retain labourers.

Tran Anh
Tuan, Deputy Director of ATHL Solutions, which specializes in providing telecom
and technology solutions, a partner of Siemens, said that enterprises will
reconsider the budget for IT in 2011 and they may cut down the expenses,
because making investment in IT would not be the top priority thing in the
context of the increasing production costs.

Also
according to Tuan, the enterprises which carry out IT projects like ATHL are
facing big difficulties when the dong/dollar exchange rate fluctuates.

“The
profits from the projects carried out since late 2010 would be decreasing, he
said. “It is because the prices of technologies and equipments were fixed in
late 2010, when the exchange rate was still low. As the dollar price has
increased, the prices of import equipments have also increased, thus making the
total costs of projects increase”.

According
to Tuan, many other companies have fallen into the dilemma like ATHL. If
companies break contracts, they may face lawsuits to be raised by partners.
Meanwhile, if they import expensive equipments to fulfill the contracts, they
will incur losses. Tuan said that his company’s choice is that it will have to
fulfill the contracts in order to retain clients.

Another big
problem for enterprises is that the lending interest rate is overly high at 20
percent per annum, which makes enterprises hesitate to borrow money to carry
out business expansion projects. “We dare not borrow money from banks if the
interest rate is still high at 20 percent, because we are not sure that we can
make the profit of over 20 percent to pay interest rates,” Tuan said. “If we
need capital, we will seek capital from shareholders and non-bank sources which
offer capital at preferential interest rates”.

In
principle, when the dollar price increases, people always think that software
export companies will get benefit. However, Le Nguyen Hong Phuong, Director of
BIT Group, which specializes in doing the software outsourcing for Australian
market, said that the benefits from the exchange rate adjustment are not big
enough to offset the increases of the electricity, price prices and other
expenses.

According
to Phuong, the company will have to purchase new equipments this year,
including computers and server. The dollar price increase has pushed the prices
of the equipments increase sharply. Besides, the company will also have to
apply new wage policies to its staff, when everything is getting more
expensive.

Difficulties
will be existing for a short time

In the
current conditions, a small enterprise with 20 workers established in 2005 like
Phuong’s has anticipated a lot of difficulties. Phuong said that the thing that
his company needs to do now is to try to exist on the market by cutting down
expenses, maintain the current apparatus and ensure the quality of products.

Phuong
admitted that as there are many macroeconomic changes, it is difficult for
small and medium enterprises to draw up long term business strategies.
“Therefore, companies need to apply flexible business plans and cut down
unnecessary expenses,” Phuong said.

However, he
believes that difficulties will exist for a short time. Companies need to focus
on controlling receipts and expenses well in order to ensure profit, rather
than trying to expand business.

Source:
Thoi bao Vi Tinh Saigon