3.2.2. Recommendations to relevant agencies
For Vietnamese SMEs to develop, the enterprises themselves must implement appropriate solutions to support their businesses. However, the regulatory role of the state for the economy in general and SMEs in particular is indispensable. Here are some of my recommendations for state agencies:
3.2.2.1. Using stimulus packages synchronously and effectively
To stimulate demand effectively, the stimulus package needs to be implemented more synchronously, correctly and accurately:
- It is necessary to further strengthen the coordination of central ministries, branches and localities in directing the implementation and monitoring of the Government's stimulus program.
- Regarding public spending: The Government needs to continue reviewing investment projects and works... to balance capital sources and only allow the implementation of feasible projects and works that are completed on schedule.
- For investment expenditure for enterprises: it is necessary to review, inspect, and monitor the subjects, use capital for the right purposes; prioritize lending capital to enterprises to invest in production, improve capital sources to innovate technology, produce new products, and seek to expand markets.
- For household spending: The government should continue to increase consumer support for residents, encourage consumption of domestic goods, which will benefit people as well as create an outlet for products and services.
- Ensure a balance between investment stimulus and consumption stimulus. Because only when purchasing power increases will businesses have capital to consume goods, have capital to restore production, and attract more workers.
- Closely monitor and supervise commercial banks to ensure that interest rate support loans are implemented in accordance with the Prime Minister's regulations and quickly put into practice; ensure that capital is used for the right purposes and to the right subjects to help organizations and individuals overcome difficulties in production and business; thereby contributing to improving the effectiveness of the Government's stimulus policy.
- Research and update the implementation of the stimulus package to propose specific solutions to the Prime Minister to promptly overcome shortcomings and deficiencies in the implementation of the stimulus package.
3.2.2.2. Strengthening effective public investment
To effectively implement public investment, it is necessary to quickly complete the planning system, carry out public investment projects in a focused manner, thoroughly implement investment projects, and have an effective and transparent monitoring mechanism to avoid negative phenomena and waste in investment...
3.2.2.3. Implement monetary and fiscal policies more effectively
Fiscal and monetary policies play a decisive role in maintaining and promoting production and business, boosting exports, stimulating investment and consumption, encouraging the use of domestically produced goods, ensuring social security, reducing poverty, stabilizing the macro-economy and ensuring safety in the credit institution system.
The Vietnamese government has used both fiscal and monetary policies to stimulate economic growth:
- Regarding fiscal policy: To stimulate consumption, the Government reduced VAT by 50% for 19 groups of goods and postponed personal income tax for the first 5 months of 2009. In reality, these policies did not stimulate consumption as expected. In addition to the policy of reducing and refunding 90% of VAT for businesses, the Government also reduced corporate income tax by 30% in the fourth quarter of 2008 and the whole year of 2009, and postponed tax for 9 months for small and medium enterprises.
- Regarding monetary policy: The State Bank has proactively increased the VND/USD exchange rate and lowered the basic interest rate. This is a very correct policy, contributing to reducing the cost of borrowing capital for businesses and improving the foreign trade balance. In addition, the policy of supporting 4% interest rate for businesses until the end of 2009, in essence, the 4% interest rate compensation is the use of fiscal tools to implement monetary policy.
However, to make fiscal and monetary policies truly effective and avoid side effects, it is necessary to pay attention to the following issues:
- Interest rate support policies need to be tightly controlled to ensure capital goes in the right direction, to the right subjects, and for the right purposes. In particular, it is necessary to strengthen effective coordination between the State Bank, commercial banks, and relevant ministries and branches.
- When the Government issues macro policies and legal regulations related to enterprises, it is necessary to seek additional opinions from entrepreneurs and enterprises, especially the role of business associations. Because from the perspective of enterprises, there are practical collisions, so there will be good suggestions and appropriate criticisms to contribute to the Government in creating macro policies and laws that are applied appropriately to reality.
- Flexibly manage monetary policy tools, interest rates and exchange rates in accordance with monetary stability goals, coordinate synchronously with fiscal policy and trade policy to stabilize the monetary market, increase liquidity for credit institutions and the economy, interest rates and exchange rates fluctuate in accordance with actual conditions and macroeconomic goals.
- Regarding fiscal policy, in the difficult context of 2009, major sources of budget revenue such as oil exports, VAT, import-export tax and corporate income tax all decreased sharply, causing a significant decrease in state revenue, while the increased spending demand will make the already difficult budget situation even more difficult. Therefore, the Government needs to have supervision, control and appropriate policies for the trade deficit situation.
- In the context of global economic recession, loosening the money supply to stimulate the economy is very necessary. Loosening monetary policy is implemented by a series of measures such as: reducing the basic interest rate, lowering the discount rate, refinancing, reducing required reserves, with the aim of increasing the money supply for the economy. However, for Vietnam, this is a sensitive issue, because the risk of re-inflation is still latent. The echo of inflation of over 20% in 2008 is still a big lesson for monetary policy to be expanded cautiously, to avoid triggering a new wave of inflation.
- Exchange rate policy needs to be flexibly adjusted in accordance with the market mechanism. Exchange rate policy needs to continue to be adjusted in relation to interest rate policy in a reasonable manner, and at the same time needs to be implemented more flexibly, in harmony with the stimulus package solutions and actual developments of the economy.
3.2.2.4. Improving the efficiency of the financial and banking system
- Monetary policy needs to closely follow the goal of preventing economic recession, controlling inflation at a reasonable level, stabilizing the money market and ensuring safety in the banking system in the face of fluctuations in the domestic and foreign economic situation.
- Set interest rates for capital mobilization in VND and foreign currencies in accordance with the market capital supply and demand situation, regulations of the State Bank of Vietnam on the basic interest rate management mechanism in VND, with a reasonable interest rate difference; strictly implement the State Bank's regulations on exchange rates and foreign exchange management.
- Develop steadily and improve the operational efficiency of the credit institution system. Shift the credit structure towards focusing capital on production, export, agricultural and rural development; expand lending to small and medium enterprises.
- Strengthen the coordination of the banking system with the Ministry of Finance and relevant ministries, branches, and local authorities in the implementation, synchronous implementation and supervision, promptly grasp the issues arising in the implementation of the interest rate support program, and strictly control to avoid negative phenomena in the process of implementing the interest rate support program.
- Credit institutions must focus on effectively implementing interest rate support lending mechanisms, strictly controlling credit quality, along with expanding credit in the direction of concentrating capital on borrowing needs for production and business, for SMEs, rural areas and large, key State projects; at the same time, properly implementing legal regulations on lending, debt classification, provisioning and using reserves to handle credit risks. It is necessary to research and promulgate new policies.
In particular, the key issue is to change lending conditions, specifically switching from the current popular form of lending, mortgage, to unsecured.
- Credit institutions increase domestic and foreign mobilization, effectively expand credit for the economy, take measures to ensure balance between capital sources and capital use; strictly control the scale and structure of short-term, medium-term and long-term credit, in VND and foreign currencies in accordance with the capacity, term and structure of mobilized capital, regularly ensure safe payment capacity; ensure safe business operation ratios...
3.2.2.5. Strengthening forecasting work
Timely and accurate forecasting can change from passive to active, especially in the integration period. Therefore, forecasting and warning work becomes an effective tool for management and operation.
CONCLUDE
SMEs in Vietnam play an extremely important role in the economy. Due to the impact of the global financial crisis, thousands of Vietnamese SMEs have gone bankrupt and are unable to continue operating, which has had a huge impact on our country's economy.
In this essay, I have outlined the most basic characteristics of the global financial crisis that began in 2007 and its developments and impacts on the world economy, and especially on Vietnamese SMEs. Not all impacts of the crisis are negative, but the impacts of the crisis on Vietnamese SMEs are not small. Through those analyses and studies, I have proposed a number of solutions to help our country's SMEs stand firm and develop further from the lessons of the financial crisis. Among the solutions that have been proposed, SMEs themselves must stand firm and develop, actively seek markets and find opportunities in danger, that is, knowing how to seize opportunities, which I consider to be important solutions for businesses in any period. But besides that, SMEs also need the help of policies from the Government. If micro and macro measures are effectively combined, the development of small and medium enterprises will be greatly promoted.
However, due to the lack of knowledge and practical experience, the thesis inevitably has shortcomings, and the solutions given are still subjective. I really hope
receive feedback from teachers to improve their understanding.
Appendix on the development and impact of the crisis
Here are the names of the major financial institutions that were acquired:
Date of declaration
Acquired organization | Acquiring organization | Type of organization being acquired | Value (USD, EUR and GBP) | |
February 22, 2008 | Northern Rock | British Government | retail banking and mortgage lending | |
April 1, 2008 | Bear Stearns, New York City | JPMorgan Chase, New York City | investment banking | $2,200,000.00 0 |
June 7, 2008 | Catholic Building Society | Chelsea Building Society | home equity fund | £51,000,000 |
July 1, 2008 | Countrywide Financial, Calabasas, California | Bank of America, Charlotte, North Carolina | secondary mortgage | $4,000,000.00 0 |
July 14, 2008 | Alliance & Leicester | Banco Santander SA | retail banking and mortgage lending | £1,260,000.00 0 |
August 26, 2008 | Roskilde Bank | Danmarks Nationalbank (central bank of Denmark) | retail banking | $896,800,000 (kr4,500,000,0 00) |
September 7, 2008 | Fannie Mae and Freddie Mac | Federal Housing Finance Agency | secondary mortgage | |
September 8, 2008 | Derbyshire Building Society | Nationwide Building Society | home equity | £7,100,000.00 0 |
September 8, 2008 | Cheshire Building Society | Nationwide Building Society | home equity | £4,900,000.00 0 |
September 14, 2008 | Merrill Lynch, New York City | Bank of America, Charlotte, North Carolina | investment banking | $44,000,000.0 00 |
September 16, 2008 - Presumed | American International Group, New York City | United States GovernmentA | insurance company | $182,000,000. 000 |
September 17, 2008 - | Lehman Brothers, New York City B | Barclays plc | investment banking | $1,300,000.00 0 |
September 18, 2008 | HBOS | Lloyds TSB | Comprehensive financial services | $21,850,000.0 00 |
Maybe you are interested!
-
The impact of the global financial crisis that began in late 2007 on small and medium enterprises in Vietnam - 16 -
The Impact of the Global Financial Crisis on Vietnam's Economy -
Global financial crisis and its impact on the operations of Vietnamese small and medium enterprises - 1 -
The impact of monetary policy on financial stability of Vietnamese commercial banks through risk tolerance - 22 -
Monetary Policy Transparency, Financial Repression and Dollarization
Acquired organization | Acquiring organization | Type of organization being acquired | Value (USD, EUR and GBP) | |
September 26, 2008 | Washington Mutual, Seattle, Washington | JPMorgan Chase, New York City | credit fund | $1,900,000.00 0 |
September 26, 2008 | Lehman BrothersC | Nomura Holdings | investment banking | $2 |
September 28, 2008 | Bradford & BingleyD | UK Government (mortgage portion) Banco Santander SA (accounts section) save) | Comprehensive financial services | £21,100,000.0 00 |
September 28, 2008 | Fortis | Government of the Netherlands (part of the Dutch assets including ABN AMRO) BNP Paribas (Belgium and Luxembourg assets) | Comprehensive financial services | €11,200,000.0 00 |
September 30, 2008 | Dexia | The governments of Belgium, France and Luxembourg | public finance and retail banking | |
10/3/2008 | Wachovia, Charlotte, North Carolina | Wells Fargo, San Francisco, California | retail and investment banking | $15,000,000.0 00 |
10/7/2008 | Landsbanki | Icelandic Financial Supervisory Authority | commercial bank | |
October 8, 2008 | Glitnir | Icelandic Financial Supervisory Authority | commercial bank | |
10/9/2008 | Kaupthing Bank | Icelandic Financial Supervisory Authority | commercial bank | |
10/9/2008 | BankWest (subsidiary of HBOS) | Commonwealth Bank of Australia | bank | £1,200,000.00 0 |
10/13/200 8 | Sovereign Bank, Wyoming, Pennsylvania | Banco Santander SA | bank | $1,900,000.00 0 |
10/22/200 8 | Barnsley Building Society | Yorkshire Building Society | home equity | £376,000,000 |
Date of declaration
Acquired organization | Acquiring organization | Type of organization being acquired | Value (USD, EUR and GBP) | |
10/24/200 8 | National City Bank, Cleveland, Ohio | PNC Financial Services, Pittsburgh, Pennsylvania | bank | $5,580,000.00 0 |
10/24/200 8 | Commerce Bancorp, Cherry Hill, New Jersey | Toronto-Dominion Bank, Toronto, Canada | bank | $8,500,000.00 0 |
November 4, 2008 | Scarborough Building Society | Skipton Building Society | home equity | |
10/1/2009 | IndyMac Federal Bank | IMB Management Holdings | credit fund | $13,900,000.0 00 |
January 15, 2009 | Anglo Irish Bank | Government of Ireland | bank | |
March 9, 2009 | Straumur Investment Bank | Icelandic Financial Supervisory Authority | investment banking | |
March 9, 2009 | Dunfermline Building Society | Bank of England (social housing loans section) Nationwide Building Society | Contribute capital to buy a house | |
March 29, 2009 | Caja de Ahorros Castilla La Mancha | Bank of Spain | credit fund | €9,000,000.00 0 |