Businesses are optimistic that they will not have to scale back their operations this year despite tough market conditions, according to a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI).

The survey on business during the third quarter, conducted through the chamber's website, found that nearly 97 percent of local enterprises will maintain their current business scales by the end of this year.

About 18 percent of businesses surveyed said they would possibly expand businesses while over 11 percent intend to narrow the scale of their operations. About 0.7 percent might suspend business activities and 0.2 percent said they may close down or dissolve.

Surveyed companies said their production and business situation was much tougher in the third quarter than that in the second, but they anticipate conditions would ease during the remainder of the year.

VCCI General Secretary Pham Thi Thu Hang said production and business indices, especially turnover, profit and inventory levels, tend to worsen at many firms, and these factors will continue to worry enterprises.

Sharp falls in profit were the main cause for the overall dim situation during the third quarter, she said, adding that economic difficulties had resulted in falling production capacity as well as employee cut-backs at businesses.

Enterprises said they assess that the country's macro-economy is getting worse, although transparency, consistency and equity are improved for administrative procedures.

While nearly 83 percent of those polled said they are borrowing capital with interest rates of 15 percent and below, only 0.6 percent thinks the 15 percent rate is reasonable and about 56 percent said they will not be able to meet this level in the long run.

Around 20 percent said they couldn't access bank loans due to high interest rates, strict lending conditions or complicated borrowing procedures; and many firms are seeking other capital sources.

Thirty-one percent said interest rates should be between 10-11 percent, and nearly 32 percent said the rates should be 8-9 percent.

Over 65 percent said loosening lending policies positively affected their activities, while about 25 percent said these policies hardly had any impacts on them, since many firms now do not need to borrow money due to falling purchasing power on the market.

About 63 percent said high inventories are serious concerns for them, with 35 percent having seen inventories increase in the third quarter over levels during the second quarter.

To deal with this problem, 53 percent are seeking new export markets, 24 percent are cutting selling prices and 4 percent are attempting to sell more goods in rural areas.

Meanwhile, 29 percent said the Government should organise more trade promotion programmes, and 26 percent said input costs for enterprises such as electricity prices should be cut to help firms reduce inventories.-VNA