'Some businesses need 149 years to sell all their real estate inventory'

Businesses are facing difficulties due to capital shortages and large inventories. Some real estate businesses have inventory periods of up to 54,334 days, according to Board IV.

Preliminary analysis of financial reports of 1,579 enterprises (in 10 industries) listed on the stock exchange, the Private Economic Development Research Board (Board IV) said that from mid-2022 to the end of the second quarter of 2023, revenue of all industries decreased. The most serious is the real estate and construction group.

Accordingly, 8 out of 10 industries had lower revenue in the first 6 months of 2023 than the same period last year. Only the information technology industry increased in size; the consumer goods and services industry remained the same.

Businesses on the stock exchange continue to face cash flow problems. Because even though they are listed companies, with the characteristics of thin equity capital, relying heavily on borrowed capital, when capital mobilization faces challenges like the present (declining orders, difficulty in mobilizing bonds, stocks, difficulty in accessing bank capital), businesses immediately face difficulties.

Real estate and construction are also mentioned as the groups with the biggest cash flow problems, as the number of inventory days and the number of receivable days (the average time it takes to collect debt after sales) increase many times.

The results of Board IV show that the average number of days of receivables of construction enterprises in the first quarter of 2023 is 1,165 days, an increase of 2.5 times compared to the same period last year; the average number of days of inventory is up to 4,527 days, 6.8 times higher. This shows that enterprises are tied up in capital and have difficulty collecting money.

For real estate businesses, the average number of inventory days in the first quarter of 2023 was up to 5,662 days, with some businesses having up to 54,334 days. That is, it would take a business up to 149 years to sell out its inventory.

In this situation, Committee IV recommends policies that focus on supporting cash flow for businesses through access to capital, extension, and cost reduction. This will help businesses create short-term cash flow at least in the second half of 2023, or until the first half of next year.

Businesses said that loan interest rates must be reduced to provide real support. Lending rates have now decreased but are still high compared to other countries; banks need to look at the future repayment capacity of businesses to increase access to credit, not just look at mortgaged assets. Board IV also proposed prioritizing low interest rates for export businesses and small and medium enterprises.

To overcome the difficulty of capital absorption due to weak internal business capacity, Board IV also believes that there should be additional counter-cyclical fiscal policies to boost aggregate demand in addition to monetary policies. For example, promoting public investment, focusing on large infrastructure, developing social housing - on the one hand supporting businesses in the construction, building materials, and real estate industries, on the other hand meeting the real needs of workers.

Measures to reduce and defer taxes and other expenses are also mentioned because this is the time to relax people.

For example, with real estate businesses, banks can consider allowing businesses providing products in the segment serving essential needs to extend debt repayments and maintain debt groups.

The business community also hopes that in the short term, there will be no regulations that create new fees and costs. With the union fee collection accounting for 2% of the salary fund, Committee IV proposed to amend the regulation to allow businesses to retain all of this amount for at least the next two years.

In addition, in the long term, Committee IV recommends paying attention to developing a modern capital market to avoid growth being too dependent on credit; continuing to conduct analysis to design corporate income tax policies appropriate to each revenue scale group and industry to ensure the goal of increasing budget revenue to help businesses develop.

Duc Minh

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