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Those, who shout out more bitterly, will be rescued?   2011-02-22 - Viet Nam Net

Economist Bui Van talks about the way commercial banks, state-owned enterprises and private enterprises shout for help and about the way the State responds to the cries.


A folk story has it that there is a shepherd boy who regularly tells lies. One day, he shouted out bitterly: “Wolf here! Save me”. People rushed to save him, but they discovered that the boy just made a joke. The same thing occurred a second time. And the third time, when he was really attacked by a wolf, no one came to rescue him, he was just “the boy who cried wolf.”


The story of commercial banks


Over the last three years, commercial banks continuously complained about the difficulties they faced. The input interest rates were described as overly high, the exchange rate reportedly fluctuated so suddenly, the Circular 13 on capital adequacy ratio posed big difficulties for banks’ operations, and new policies caused serious shortage of dong and dollar to banks.


The strange thing was that after banks wept at the beginning of the year about difficulties, they regularly reported big profits at the end of the year. The profits of the next years always far exceeded the profits of the previous years, and the ratios of returns on stockholder equity were surprisingly high.


At a conference, when asked why they do not ease the interest rates in order to ease the pressure on businesses, the profitable banks said that they are also businesses, and they have to make every effort to earn a profit.


The story of banks has reminded people about the story of the shepherd boy. If banks once again complain about difficulties and losses, no one will believe them, and no one will rush to rescue them.


The story of state-owned enterprises


The same is occurring with state-owned enterprises.


In the last few years, all state-owned economic groups voiced their complaints about the difficulties in the post-crisis period. They complained that they have to sell products at prices below the production costs, which have caused heavy losses to them. The state-owned conomic groups insisted on raising retail prices and called on the State to compensate them.


The complaints once made people believe that state-owned economic groups were in distress. However, they then started at the report that 20 out of the 21 biggest economic groups and general corporations made profit.

The funny thing is that right after reporting profits, the state-owned corporations continue complaining about difficulties, calling for the support from the State. The same scenario is occurring with coal, electricity producers and petroleum distributors.


The story of private enterprises


Then there were the enterprises which really faced difficulties and dangers in the global economic crisis – private enterprises.


The problem is that the private enterprises are small businesses that could not raise their voice to be heard and were not powerful enough to lobby for the policies that would benefit them.


As the private enterprises did not know to whom they should cry and whom they should meet to lobby for policies, they did not think of crying for help any more. If they met a major difficulty, they only had one choice – shutting down their business.


The unlucky thing is that the enterprises, which cannot cry for help, create 85 percent of the total jobs in the national economy. Meanwhile, the biggest worry for all economies in crisis is unemployment, not the stock prices, or real estate prices.


The story of the state


All the complaints have been directed to the State, which, considering the situation of economic sectors, sets up policies or allocates preferences.


However, in this case, transparency is the most important factor. The people calling for help need to report the truth. Meanwhile, the State, needs to find who really need support, so that it can send support in the right direction.

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