Economic recovery still a long way off, businesses say

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Nearly 50 percent of Vietnamese companies have given up hope of an economic recovery coming next year and thus see little near-term hope for their future prospects, a new survey has found.

Many local businesses said they were preparing for the worst as economic conditions may deteriorate in the remaining months of 2012. About 46 percent of businesses said the economy will remain in the doldrums next year while 44 percent said it may get better, but only in the second half of 2013, according to the survey released by Vietnam Report JSC this week.

The survey of more than 200 of Vietnam's largest companies also showed that almost all business executives believed that most local firms were on their way to restructuring.

Most respondents complained that credit constraints remained a major problem, with commercial banks only offering loans to profit-making firms or regular clients. They said banks were "unsympathetic" and did not want to help businesses.

Vietnam's central bank last week began allowing lenders to raise their credit growth targets to up to 27 percent from a previous maximum limit of 17 percent in a bid to boost lending and spur economic growth.

Credit growth has been sluggish so far this year and economic growth may slow to 5.3 percent from 5.9 percent in 2011, according to the National Financial Supervisory Commission.

The central bank last month asked commercial lenders to cut interest rates on existing loans to below 15 percent, but many companies said they had not benefited from the policy.

Luu Ngoc Khoa, vice chairman of a business association in Ho Chi Minh City's Tan Binh District, told Vietweek that many member companies are still paying more than 17 percent per year on old loans. His own company is being charged 19.5 percent.

Ho Duc Lam, vice chairman of the Vietnam Plastics Association, said interest rates have fallen, but are still very high.

"I don't see any other country that has higher interest rates," he said.

Lam also said many companies do not want to complain publicly and name which banks are ripping them off for fear of being denied credit later.

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