VietNamNet Bridge – Small- and medium-sized enterprises (SMEs) still face “special difficulties” even though the national economy has improved in the last 10 months, according to a National Finance Supervisory Council’s report submitted to the government.

The business efficiency of 100 businesses with total assets below VND100 billion, surveyed by the council, has decreasing steadily since 2008, the report said.

The ROE (return on equity) and ROA (return on assets) indexes of the 100 businesses dropped from four and two percent in June 2008 to minus two and minus one percent, respectively, in June 2014.

The enterprises’ unpaid taxes by October had increased by 12.9 percent compared with the end of 2013.

The council’s members believe that in the medium term, the private investments will still be modest once credit grows very slowly due to 1) weak market demand, 2) businesses’ limited financial capability, 3) the slow recovery of the real estate market (the low real estate price makes mortgaged immovable assets less valuable) and 4) the higher interest rate than the expected inflation rate.

The State Bank of Vietnam, in an effort to ease the financial burden on businesses, has slashed the ceiling deposit interest rate to 5.5 percent. However, Ha Noi Moi newspapers quoted several businessmen as saying that this does not have much significance, because they still have to pay 20-22 percent per annum for the loans.

Analysts surveyed 800-1,000 non-financial companies that list their shares on the Hanoi and HCM City Stock Exchanges, UPCOM (the trading floor for unlisted shares), and public companies.

The survey found that the enterprises’ average revenue in the first six months of 2014 increased by 20.1 percent over the same period of 2013, the sharpest increase since 2009.

The enterprises’ assets and average capital are also on the rise. The average total assets and stockholder equities increased by 19.44 percent and 18.92 percent, respectively, over the same period in 2013.

Economists said the figures show business confidence has been restored. This was seen in the stock market, with the VN Index increasing by 18.16 percent by the end of the second quarter over the first quarter.

Meanwhile, the latest quarterly Eurocham report showed that the BCI (business climate index) was 74 points in the third quarter, far exceeding the 66 point threshold of the previous quarter.

In the first half of the year, the ROA and ROE of non-financial businesses were 1.49 percent and 3.7 percent, respectively, representing 0.28 and 0.54 percent increase over the same period of 2013.

According to the General Statistics Office (GSO), over 60,000 businesses were set up in the first 10 months of the year, while 13,000 businesses which suspended their operations have resumed work.