Monetary and credit policies supporting exporters

At the National Assembly session last week addressing plans for economic and social development in 2025, lawmakers proposed loosening monetary policies to support specific sectors, including export enterprises.

Looser monetary policy will help kickstart certain sectors, photo Le Toan

Some said the State Bank of Vietnam (SBV) should offer specific credit packages to support businesses in sectors that we need to boost, such as agriculture, fisheries, tourism, and export processing.

Additionally, they also said that it is necessary to increase capital more aggressively and enhance the lending capacity of commercial banks to stabilise the exchange rate and prevent hoarding, as well as improve the lending capacity of commercial banks.

Shantanu Chakraborty, country director of the Asian Development Bank in Vietnam, noted that the Asian region continues to maintain growth momentum thanks to two key factors, which are strong domestic demand and the recovery of export activities.

“However, there are significant challenges stemming from the rise of protectionism amid increasing geopolitical tensions, the impact of climate change, and uncertainties from the Chinese real estate market,” Chakraborty said.

Amid the continuing rise in exchange rates, the SBV has already taken stronger measures, including selling foreign currencies for intervention.

On the treasury bill channel, the SBV offered a 28-day term through interest rate auctions. $25 million was successfully auctioned at an interest rate of 3.9 per cent per annum, and $150 million in treasury bills matured, resulting in a net injection of $125 million.

Thus, the SBV injected over $330 million into the banking system through two channels, OMO and treasury bills, in the November 5 trading session. This marked the second consecutive net liquidity injection by the SBV since the beginning of the week after injecting over $980 million through the open market channel in the previous session.

The use of both channels serves a dual purpose of ensuring liquidity for the banking system while reducing pressure on exchange rates by narrowing the interest rate differential in the interbank market.

Vietcombank shared that it has supported businesses in the export field by waiving or reducing various service fees such as collection fees, international transfer fees, and letters of credit payments. Additionally, it has launched several preferential credit packages with competitive, lower-than-market interest rates for both foreign currency short-term loans and VND loans, with fast disbursement times.

“The bank’s solutions to support export businesses have reduced costs, simplified loan procedures, and maximised operational efficiency. Many special preferential loan programmes are designed specifically for export businesses, including working capital financing initiatives with competitive interest rates and fast disbursement,” said a representative of Vietcombank’s Ho Chi Minh City branch.

In analysing the outlook for Vietnam’s macroeconomy, Nguyen Xuan Thanh, an economist and senior lecturer at Fulbright University, emphasised the main driver of growth, industrial production oriented towards exports, is expected to help Vietnam achieve over 7 per cent growth in 2024 and 2025.

“Regarding the monetary market, I propose maintaining the target of 15 per cent credit growth for 2024 and 2025, with the banking system joining forces to solve financial challenges for large corporations in multiple sectors, including real estate,” Thanh said.

“However, challenges remain, including exchange rate fluctuations, domestic consumption, and public-private investment. Public investment disbursement for infrastructure is lagging behind the accelerating economy. I hope the government will implement timely solutions to make public investment a growth driver for GDP in 2025,” said Thanh.

At a conference connecting export businesses and banks organised by the Trade and Investment Promotion Centre of Ho Chi Minh City in collaboration with the SBV’s Ho Chi Minh City branch last week, Nguyen Duc Lenh, deputy director of the branch, confirmed that the short-term lending interest rate for export enterprises is currently capped at 4 per cent per annum.

“This creates favourable conditions for businesses to expand and grow their operations, contributing to boosting this sector’s growth. In the city alone, total credit outstanding for export businesses reached $4.39 billion, accounting for 6.21 per cent of the total credit for five key sectors in the area,” said Lenh.

Assessing Vietnam’s development landscape through 2024 Nguyen Thuy Hanh, Standard Chartered Vietnam’s CEO and head of Banking and Coverage, delves into Vietnam’s development this year.

Monetary policy flexible and stable Vietnam’s central bank remains steadfast in implementing a proactive yet cautious monetary policy, exercising flexibility in the use of monetary tools amid recent sharp exchange rate fluctuations.