Only one third of SMEs able to get bank loans

Only one third of SMEs able to get bank loans

The results of the survey were revealed during a seminar on capital solutions for businesses, organised by the Vietnam Chamber of Commerce and Industry (VCCI) on May 10, in Hanoi.

According to the survey, up to two thirds of Vietnamese SMEs are either unable to borrow from banks or find it extremely difficult.

Dr. Vu Tien Loc, chairman of VCCI, said that many SMEs fail to meet lending requirements.

Also, interest rates may be too high for many of these businesses. A number of banks raised their deposit interest rates to between 15 per cent and 19 per cent, much higher than the 14 per cent cap set by the State Bank of Vietnam. This has pushed lending interest rates to around 20 per cent, sometimes as high as 27 per cent. Service fees have also been on the rise.

This has caused a shortage of capital that has forced many businesses to cut back, or even close their doors.

Meanwhile, in the first quarter of this year, due to the increasing prices, particularly those of agricultural products higher 2-3 times than the same period of last year, businesses had to need doubled capital for the purchase.

Doan Trong Ly, chairman of Animal Production Processing and Import Export Joint Stock Company (Aprocimex), said enterprises are coping with not only higher prices of input materials but also monetary-tightening policy with credit growth reduced to 16 per cent from 45 per cent.

Experts at the seminar said that, despite being an effective way to mobilise capital, the stock market is facing difficulties because of the government’s recent monetary policies.

On the other hand, the bond market may be a feasible way to mobilise capital in the long-term.

Dr. Nguyen Thi Mui, Director of VietinBank Human Resource Development and Training School, said the Government should make adjustments to fiscal policy that would lower lending interest rates businesses.

She added that inflation in May could reach 2.2 per cent, and that the Government needs to have strict punishments for banks that exceed the stipulated deposit interest rate of 14 per cent

Currently, SMEs account for up to 97 per cent of the country’s total number of enterprises, and make up nearly 45 per cent of the national GDP.