Cash-strapped big companies make fire sale of assets: government

The report on the socioeconomic situation in 2022-23 will be discussed by lawmakers on the opening day of a new session on May 22.

Since late last year important drivers of growth, especially in industrial production, exports and FDI, have weakened, and the index of industrial production decreased by 1.8% year-on-year in the first four months of this year, the report said.

Orders decreased and inventories increased in sectors like seafood processing, footwear, steel, cement, and construction materials, it said.

"Enterprises have faced capital shortages and high interest costs and found it hard to access bank credit."

Companies, especially in property, are facing the pressure of redeeming large amounts worth of corporate bonds, it said.

Corporate bonds worth VND284 trillion (US$12 billion) mature this year, 40% issued by real estate firms.

The figures are VND363 trillion and 30% in 2024.

"A number of large multi-industry enterprises have had to sell assets at low prices or have been acquired [due to] cash flow difficulties," the report said.

This had also been mentioned earlier by Minister of Planning and Investment Nguyen Chi Dung at a meeting of the National Assembly’s Standing Committee on May 9.

"Many large enterprises have had to sell their assets for half of their real value. Worryingly, foreign businesses have bought them."

Dau Anh Tuan, deputy general secretary of the Vietnam Confederation of Trade and Industry, said it is a pity that due to short-term difficulties reputed enterprises are being forced to sell their assets, including famous and time-honored brands.

They are mainly in property development and manufacturing, two sectors that have been plagued by legal problems and lack of cash flows and orders.

According to the report, credit growth for the year up to May 4 was only 2.87%, evidence of the economic slump.

Bank lending interest rates have edged down but still remain high at around 9.3%.

Hundreds of thousands of workers in large industrial parks have been furloughed or laid off. Bankruptcies and closures of businesses could increase in the coming months.

The government will instruct banks to seek to reduce costs to lower interest rates and increase lending.