5.2.1. Recommendation for construction firm’s managers
The results show that the average debt ratio of construction firms is high (65%). Therefore, construction firms need to find other sources of capital mobilization besides bank loans.
For enterprises in the group of construction enterprises and building materials, it is necessary to renew construction machinery and equipment
to shorten the project implementation time in order to improve business efficiency and reduce the pressure of short-term loans.
During the crisis period, construction enterprises should look for other low-cost capital sources; speeding up the pre-acceptance test of construction volumes for payment; using other temporary sources of capital such as canceling tax debts equal to the value of construction volumes funded by the State
Small firms find it difficult to get a bank loan, so Construction firms need to pay attention to the preparation and publication of financial statements data in accordance with the current accounting regime. The financial statements presented specifically and transparently will help partners, including banks, understand more about firms. This is a way to reduce the information asymmetry between parties and create favorable conditions for firms to access loans from banks.
The construction firms need to establish an effective internal control system, which will contribute to increasing the reliability of
information from financial statements, ensuring efficient operation of firms and minimizing risks.
The construction firms need to pay attention to the acceptance of the completed construction volume to reduce the pressure on bank loans because this is the capital chosen by the firm before considering the bank loan plan. This is confirmed by the positive relationship between liquidity and financial assets in all three measurement ways.
In addition, the construction firms always maintain and seek relationships with stable and quality input suppliers in order to enhance the maximum exploitation of temporary commercial credit capital from partners.
The research results show that profitability has a strong opposite influence on FS. Therefore, the construction firms need to focus on improving business efficiency. However, one of the weaknesses of Vietnamese construction firms is that their average profitability in the period 2007-2015 is low at 2.2%.
5.2.2. Recommendation for Comercial bank
Loan appraisal is based on criteria for construction lending procedures such as capital plan and disbursement progress to ensure safe lending to the banking system. On the other hand, it is necessary to classify construction firms to assess the financial capacity for each loan. Implement lending policies with reasonable interest rates for projects. Review the loan to collateral ratio.
5.2.3. Recommendation for macro policy makers
(i) For Govemment
The results show that the most construction firms have high debt ratio (65% on average), so the Government continues to allow the construction firms to increase equity capital, or transfer the state capital in the firms
to investors.
The government should require that the financial statements of al types
of construction firms be audited to create a transparent competitive environment in construction project. This also solves a part of information asymmetry between the construction company and the lender.
The government needs to speed up the disbursement to pay debts for construction projects for construction firms. Payment of construction value completed on schedule is also a way to support construction firms to have capital to cover their business activities, and to reduce pressure on bank loans. The Government allows the investor (Project Management Board) to provide loan guarantees for small construction firms to participate in the implementation of projects in some necessary cases. The recommendation comes from the research results showing that it
is difficult for small construction firms to access bank loans because they do not have enough assets to guarantee their loans.
The Government should have a policy to continue reducing the corporate income tax rate to below 20%, this policy is as a regulatory tool to support construction enterprises to accumulate capital for reinvestment. Reviewing inefficient public investment construction projects, transferring public investment construction projects to the private economic sector in the form of BOT, BT. Removing administrative procedural barriers on site clearance, project approval and disbursement to facilitate rapid project implementation.
(ii) For State Bank
On the part of the State Bank, there should be measures to direct commercial banks to apply ceiling interest rates on construction activities
to avoid risks for bad debts. The Bank needs to buid iterm to evaluate and classify construction firms in lending activities. The positive relationship between short debt and interest rates shows that the construction firms take risks when the interest rates rise.
The results also showedthat the financial crisis of 2008-2011 hada significant positive impact on the debt ratio and the long debt ratio. To cope with the financial
crisis, the macro makers agency needs to to control inflation, tight and flexible monetary policy, adjust exchange rates, interest rates, credit limits, control construction loans.