Econ
Expecting reduced interest rate to have positive impact on enterprises
Decision on reducing short term interest rate haven been a welcome news to the business community, especially at the end of the year, an important period for enterprises to push forward with production plan and complete the year’s objectives.
However, in accordance with some enterprises, despite being in the list of 5 priority fields, accessing low-interest loan is not easier as expected.
Concern over risks
After one month the State bank of Vietnam (SBV) decided to reduce the short term interest rate in Vietnam Dong to 0.5% per year, commercial banks have promptly follow this decision. However, representative of an enterprise in Hanoi said, he had to waited for few hours at the bank to asking for loan, but then returned home in vain. Moreover, banks are hesitated in accepting assets under mortgage guarantee, or they will undervalue them when giving out loan. It is the case Huy Long Limited Ltd., as the Director Vo Quang Huy said, when the company’s farms were given as mortgage, banks did not value these assets in accordance with the market price. “For example, 1 acre used for planning oranges and pomelos can generate revenue from 700-750 million VND per year, but under mortgage guarantee, it is only determined to be valued at tens of millions VND” – Huy shared.
According to banks, only enterprises with credit rating A without bad debt history can access credit loan. Therefore, for Dang Van Phong (Hung Yen), accessing loan is very difficult when starting up by an agricultural project. “In addition to other requirements, enterprises looking for loans have to have efficient business plan, stable and transparent financial report. At present, as many start-ups still conduct transactions in cash, they cannot prove their financial capabilities. In particular, in some case, banks request newly-established enterprises to be operated for few years and at a certain of scale to be given loan” – Phong said.
Choosing appropriate enterprises to give out loan
According to Vice Chairman of Vietnam Association of Small and medium enterprises (VINASME) To Hoai Nam, not only Vietnam but also other countries in the region, small and medium enterprises (SME) also face difficulties in accessing loan, due to unable to meet the credit requirements. “We have suggested to be the connection between banks and enterprises. Many provinces have organized conferences between enterprises and banks. However, banks always give reasons for their high requirement as also being enterprise, so they have to take into account the efficiency in any investment. If giving out loan proves to be difficult, so enterprises will have to overcome a very difficult situation” – Nam said. However, the representative of VINASME also suggested, banks need to reform their loan procedures, with a view to ensure safety for the banks but not too complicated; offering new and upgraded credit services to match the needs of enterprises; consulting enterprises for more transparent in financial information, so that banks can give out loan based on the flow of money, which in turn avoid depending on assets for mortgage guarantee as of present.
With regard to this issue, one leader at a commercial bank said: “in case of enterprises with good lending record, we will support them to have loan with low interest rate. There will be more preferential treatments to VIP customers.” However, many enterprises unqualified for lending due to ineffective business plan, or suffering great loss, therefore, despite looking for increase credit growth, we cannot give out loan in the current condition. “In normal condition it is may be acceptable, but when the economy is going through hard time, even with mortgage, there may be bad debt”.
Concern over risks
Customers making transaction at Hanoi VietcomBank.
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According to banks, only enterprises with credit rating A without bad debt history can access credit loan. Therefore, for Dang Van Phong (Hung Yen), accessing loan is very difficult when starting up by an agricultural project. “In addition to other requirements, enterprises looking for loans have to have efficient business plan, stable and transparent financial report. At present, as many start-ups still conduct transactions in cash, they cannot prove their financial capabilities. In particular, in some case, banks request newly-established enterprises to be operated for few years and at a certain of scale to be given loan” – Phong said.
Choosing appropriate enterprises to give out loan
According to Vice Chairman of Vietnam Association of Small and medium enterprises (VINASME) To Hoai Nam, not only Vietnam but also other countries in the region, small and medium enterprises (SME) also face difficulties in accessing loan, due to unable to meet the credit requirements. “We have suggested to be the connection between banks and enterprises. Many provinces have organized conferences between enterprises and banks. However, banks always give reasons for their high requirement as also being enterprise, so they have to take into account the efficiency in any investment. If giving out loan proves to be difficult, so enterprises will have to overcome a very difficult situation” – Nam said. However, the representative of VINASME also suggested, banks need to reform their loan procedures, with a view to ensure safety for the banks but not too complicated; offering new and upgraded credit services to match the needs of enterprises; consulting enterprises for more transparent in financial information, so that banks can give out loan based on the flow of money, which in turn avoid depending on assets for mortgage guarantee as of present.
With regard to this issue, one leader at a commercial bank said: “in case of enterprises with good lending record, we will support them to have loan with low interest rate. There will be more preferential treatments to VIP customers.” However, many enterprises unqualified for lending due to ineffective business plan, or suffering great loss, therefore, despite looking for increase credit growth, we cannot give out loan in the current condition. “In normal condition it is may be acceptable, but when the economy is going through hard time, even with mortgage, there may be bad debt”.
