Business
Financial leasing – new solution for enterprises
Capital for enterprises’ operation has always been a headache for managers, as the access to banks’ loan is very difficult. In these situation, financial leasing is optimal solution.
Potential market
A famous quote from American industrialist Paul Getty, the first billionaire of the world: “If it appreciates, buy it. If it depreciates, lease it”. At present in the US, over 30% of the total equipment is under leasing contract. More than 80% enterprises ranging from small to large scale in the list of Fortune 500 are lending equipment for their businesses and operations. Meanwhile in Japan, the revenue of financial leasing is 50 billion USD per year. The total revenue of global financial leasing is nearly 1 trillion USD per year. Meanwhile in Japan, the revenue of financial leasing is 50 billion USD per year.
When taking part in financial leasing, or operational leasing, enterprises will have access to new technologies, in turn innovate the technologies and accessing 100% capital of financial leasing companies. In Vietnam, financial leasing and companies operating in this sector have been established and developed for 20 years. However, according to statistics of the State Bank of Vietnam (SBV), there are only 11 financial leasing companies, of which the majority has low capital and weak resources mobilization capabilities. Vietnam is still a small market, with the credit growth of 8.7 trillion VND, contributing to 0.16% of the total credit growth of credit institutions. Therefore, there remains large potential for financial leasing to grow in Vietnam, especially for small and medium enterprises (SMEs) with 95% of the total enterprises.
When will enterprises look for financial leasing?
In recently, financial leasing is getting positive result. Evidently, BiDV-SuMi Trust Financial Leasing Company (BSL), a joint venture between Bank for Investment Development of Vietnam JSC (BIDV) and Sumitomo Mitsui Trust Bank (SuMi Trust) of Japan has officially gone into operation. BSL has charter capital of VND895.6 billion and operates as a full-fledge financial leasing company under Vietnamese regulations. Under the new formation, Sumitomo Mitsui TRUST Bank (SMTB) will own 49 percent of the charter capital and BIDV will own 50 percent. There are high possibilities that the participation of shareholder SuMI Trust will attract the attention of 3,200 Japanese enterprises operating in Vietnam – in which many have gotten used to financial leasing. From this foundation, there will be many enterprises with foreign direct investment (FDI) as well as local enterprises. In cooperating with experienced foreign investors and a large customers network is the right approach in the current context for financial leasing companies.
“BSL will connect with producers and suppliers to support users looking for appropriate equipment to meet their production demand, in turn develop suitable financial solution through financial leasing” – General Director of BSL Nguyen Thieu Son said.
Chairman of SME Vietnam Association Nguyen Van Than said, a small enterprise specialized in bicycle production in Hai Duong has a large order, however, as they do not have the sufficient capital to expand production, the enterprise could not take that order. Therefore, Mr. Than said, financial leasing will be an appropriate solution for Vietnamese SMEs in the similar situation like the enterprise in Hai Duong.
Meanwhile, representative of SBV Nguyen Trong Du said, the characteristics of financial leasing company are not only to support capital, but also receiving capital from other organizations and forms of mobilization channels, so that this will be a fund mobilization channel, especially for mid term and long term capital in the future. Mr. Du said, administrative agencies will continue finalizing the legal framework, which creates favorable conditions for financial leasing activities.
A famous quote from American industrialist Paul Getty, the first billionaire of the world: “If it appreciates, buy it. If it depreciates, lease it”. At present in the US, over 30% of the total equipment is under leasing contract. More than 80% enterprises ranging from small to large scale in the list of Fortune 500 are lending equipment for their businesses and operations. Meanwhile in Japan, the revenue of financial leasing is 50 billion USD per year. The total revenue of global financial leasing is nearly 1 trillion USD per year. Meanwhile in Japan, the revenue of financial leasing is 50 billion USD per year.
Overview of the meeting.
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When will enterprises look for financial leasing?
In recently, financial leasing is getting positive result. Evidently, BiDV-SuMi Trust Financial Leasing Company (BSL), a joint venture between Bank for Investment Development of Vietnam JSC (BIDV) and Sumitomo Mitsui Trust Bank (SuMi Trust) of Japan has officially gone into operation. BSL has charter capital of VND895.6 billion and operates as a full-fledge financial leasing company under Vietnamese regulations. Under the new formation, Sumitomo Mitsui TRUST Bank (SMTB) will own 49 percent of the charter capital and BIDV will own 50 percent. There are high possibilities that the participation of shareholder SuMI Trust will attract the attention of 3,200 Japanese enterprises operating in Vietnam – in which many have gotten used to financial leasing. From this foundation, there will be many enterprises with foreign direct investment (FDI) as well as local enterprises. In cooperating with experienced foreign investors and a large customers network is the right approach in the current context for financial leasing companies.
“BSL will connect with producers and suppliers to support users looking for appropriate equipment to meet their production demand, in turn develop suitable financial solution through financial leasing” – General Director of BSL Nguyen Thieu Son said.
Chairman of SME Vietnam Association Nguyen Van Than said, a small enterprise specialized in bicycle production in Hai Duong has a large order, however, as they do not have the sufficient capital to expand production, the enterprise could not take that order. Therefore, Mr. Than said, financial leasing will be an appropriate solution for Vietnamese SMEs in the similar situation like the enterprise in Hai Duong.
Meanwhile, representative of SBV Nguyen Trong Du said, the characteristics of financial leasing company are not only to support capital, but also receiving capital from other organizations and forms of mobilization channels, so that this will be a fund mobilization channel, especially for mid term and long term capital in the future. Mr. Du said, administrative agencies will continue finalizing the legal framework, which creates favorable conditions for financial leasing activities.
