Local businesses need government assistance

Increased foreign investment attraction has in recent years continuously created great opportunities for domestic enterprises to join the global supply chain. However, many businesses said that they still need assistance.
Local businesses need government assistance ảnh 1 An enterprise rents a large space in the High-Tech Park of Ho Chi Minh City (Photo: SGGP)
Mr. Hoang Tho Vuong, Director of the Center for Supporting Industry Development in Ho Chi Minh City, said that enterprises in the supporting industry need land. For example, three current industrial parks (IZs) and high-tech zones in the southern metropolis have separate subdivisions for this group of businesses. In particular, the occupancy rate in the Hiep Phuoc Industrial Park reached 93/200 ha, but the extension of the issuance of land use right certificates for investment projects in the park made many businesses hesitate to invest despite much empty land funds.
Regarding the above issue, many businesses explained that if they rent a land lot in the industrial park but they are not granted certificates of land use rights. Without certificates of land use rights, they impossibly mortgage it to ask for a bank loan and a construction permit to carry out the project on schedule or participate in the stimulus program of the municipal People's Committee.
According to Ms. Lam Dieu Tam Hieu, Deputy General Director of Kizuna Company with 10-year experience in building and operating industrial zones for supporting industry enterprises, the government should form ready-built factories including technical infrastructure systems such as a factory building with an appropriate size and areas and synchronous integration of the information technology infrastructure platform, helping enterprises to apply high technology and rapidly transform digitally.
In particular, in industrial zones, there must be regulations, policies and professional service personnel along with comprehensive support services from the Industrial Park Management Board.
Some businesses also believe that, from now to 2025, Ho Chi Minh City can form and develop a type of factory area with infrastructure and services in the available land fund in existing industrial parks or develop new synchronous industrial zones which are included in the plan. In the long term, it is necessary to develop large-scale synchronous industrial zones of several hundred or several thousand hectares according to the city’s strategies.
Besides the lack of land funds, enterprises in the supporting industry also face difficulties in investment capital to innovate production technology. Mr. Chau Ba Long, General Director of Minh Nguyen Supporting Industry Joint Stock Company, said that production technology is the core factor that determines a company's opportunity to join the global supply chain. He explained that in addition to the standard quality factor that enterprises with foreign direct investment (FDI) offer, domestic enterprises must compete with FDI enterprises in the supply chain on product prices.
Most FDI enterprises supplying supporting industry products have been set up for many years; so they have strong internal technological resources; thereby, they offer good prices for products. Meanwhile, with outdated production technology and a high rate of defective products and low efficiency, domestic enterprises hardly compete against their FDI peers. Therefore, domestic enterprises need capital to innovate technology.
In fact, in 2018, the People's Committee of Ho Chi Minh City issued an investment stimulus program specifically for enterprises in the supporting industry. Up to now, 14 enterprises with 15 projects have been approved to borrow capital from the investment stimulus program in the field of supporting industry. The average investment capital for a project is VND78,405 billion, of which the interest rate subsidized loan capital for each project is VND41,149 billion.
Last but not least, the United States Agency for International Development through the USAID LinkSME project and the Enterprise Development Department under the Ministry of Planning and Investment have implemented a project to promote financial access for small and medium-sized enterprises in the supporting industry to improve their production capacity. Enterprises can borrow no more than 80 percent of the total investment capital of each production and business project/plan. The maximum loan period is not more than 7 years.
In particular, the project's short-term loan interest rate is only 2.16 percent a year, and medium-term and long-term is 4 percent per year. So far, thanks to the supportive loans, many businesses have been able to access capital and develop and participate in the supply chains of large enterprises. However, the above-mentioned supports only admittedly meet the needs of enterprises partly.
With respect to solutions, Mr. Do Phuoc Tong, Chairman of Ho Chi Minh City Electrical and Mechanics Association, suggested speeding up the implementation of the policy to support capital and interest rates issued by the Government necessarily along with loosening regulations on lending conditions for enterprises.
On the other hand, authorities need to extend low-interest loan packages from 6-12 months instead of only 3-6 months to support businesses. As for Ho Chi Minh City, the city government needs to soon reopen the investment stimulus program for the supporting industry, which has been interrupted recently, to remove difficulties in capital for businesses.
Many businesses said that the digital transformation program is the need of all economies today. Businesses in Ho Chi Minh City particularly and in the country generally have a need for comprehensive digital transformation with the building of a comprehensive management system to improve production and business efficiency.
To do so, enterprises need to invest in ERP software (general management of an enterprise) and corresponding hardware which cost high; as a result, they expected the state government to have support with the aim to make this process happen faster.
Along with that, supporting policies to connect the market to solve output for businesses is indispensable; therefore, competent agencies need to develop promotion and advertising programs in many export markets, especially key markets such as the United States, Australia, and Europe, so that enterprises can have more cooperation opportunities.

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