Big firms lack money, small ones lack orders: finance minister

Companies are generally in trouble, and many have shut down this year, he said at a government meeting Monday while reviewing the economic performance in the first six months.

In the first half of the year around 110,300 companies had filed for closure, up 10% year-on-year, according to the General Statistics Office.

Their biggest obstacles have been rising costs of inputs, finding buyers and high loan interest rates, it said.

Garment and electronics manufacturers only have low-value orders and lack highly skilled workers. Food processors and cement manufactures have been hit by a slump in demand, it added.

Phoc said the government has been providing support in terms of lowering taxes and fees over the last four years, but a new strategy is needed to ensure sustainability.

The government should resolve the problems that companies face in doing business and help them manufacture and sell their products, he said.

One of the solutions is to increase public spending, because every dong spent by the government will attract two from the private sector, he said.

The government has more than VND1 quadrillion ($39.4 billion) for public investment, including money from official development assistance loans at 6% interest, much lower than the 10-12% that banks demand, he said.

But in the first half public investment only reached 28.8% of the target, he said.

"Without a push in public spending it will be difficult to boost the economy".