SME transparency a must for loans: experts

Small and medium - sized enterprises struggle to access banking credits. - File Photo

The conference was jointly held by the Viet Nam Chamber of Commerce and Industry and the State Bank of Viet Nam to discuss credit boosts for SMEs facing long-standing difficulties in accessing loans.

According to banking and financial expert Can Van Luc, most SMEs have low management capacity and outdated technology, they lack transparency in information and feasible business plans, and do not have adequate assets for mortgages, making them ineligible for banking loans.

Credit institutions are hesitant to lend SMEs money for the same reasons. Luc noted that these problems were compounded by complex banking procedures and a shortage of appropriate loan packages for SMEs.

Mac Quoc Anh, vice chairman of the Ha Noi SME Association, said the efficiency of SMEs is low. “Given the increasingly harsh international competition, points which are often regarded as advantages of SMEs, such as flexibility and low operation costs, are no longer advantages,” Quoc Anh said.

Hoang Thi Hong, director of SME Development Fund under the Ministry of Planning and Investment, said improving transparency of SME information was an important solution to enable SMEs to access credit.

“It is necessary to develop a database about SMEs for credit institutions to use in evaluating lending decisions,” Hong said, adding that the database should include information about total assets, equity capital, revenue, profit and operations.

Credit market for SMEs

Also needed is a credit market for SMEs, with appropriate lending packages based on demand, Hong said. She added that lending should be provided for a group of SMEs which join with each other in a production chain.

In addition, capital raising channels should be diversified, rather than largely dependent on banks, for instance raising capital from the securities market, Hong said.

According to Nguyen Quoc Hung, director of the central bank’s Credit Department, SMEs are a driver of the national economy and are among the priorities for banking credits.

Lam Van Chieu, deputy director of Cuong Tan Company which produces rice variety, said that banks should increase trust-based lending, based on the efficiency of firms.

Tran Quoc Toan from the Toan Xuan Company said that reasonable interest rates should be provided for SMEs to encourage their investments and expansions.

Closing the conference, Dao Minh Tu, deputy governor of the State Bank of Viet Nam, said: “If economic conditions allow, the central bank will continue to cut rates.”

SMEs account for 97 per cent of the total number of firms in Viet Nam, contributed about 45 per cent of gross domestic product, 31 per cent of the budget revenue and create five million jobs.