City's businesses in need of capital injection

City’s businesses in need of capital injection.

As the end of the year approaches, businesses have been ramping up efforts to get back into the game, especially to meet greater demand for goods and services in the upcoming holidays.

HCM City’s food producers must secure a large amount of capital soon so they can stockpile raw materials and plan their production in anticipation of Christmas and traditional Tết holidays, said Lý Kim Chi, president of the HCM City Food and Foodstuff Association.

A capital injection is especially vital at this point because most businesses have run out of what little emergency funds they had during the lockdown as it was costly to keep production running using the three-on-site method, which required businesses to provide workers with accommodation, food, and COVID-19 tests.

Nguyễn Quốc Anh, president of the HCM City Rubber and Plastic Association, said the association members had been struggling to cope with higher input prices, as much as a 20 percent increase, since the beginning of the year. There has been a shortage of raw materials as the global economy was recovering, which will likely drive prices up even further. To make matters worse, other costs including COVID-19 prevention and logistics have also been climbing.

Meanwhile, demand had not fully recovered and sales had been slow, which severely affected cash flow. The grim situation was expected to last at least until the end of the year.

“As of now, most of our members have run dry on cash to meet their financial duties. We have asked commercial banks to consider granting credit extensions and debt restructuring, especially in support of domestic businesses,” said Anh.

Minh said since the beginning of the year, credit growth in the country’s largest economic hub was recorded at 6.41 percent. By the central bank’s projection, credit growth for the whole year would likely hit 12 percent, giving banks a lot of room to maneuver during the last quarter of the year.