SMEs need more credit access

Their limited capacity due to the small production scale, unstable consumption markets, poor management and human resources, also resulted in the SMEs failing to meet loan conditions and risk management provisions, Dong said.- Photo tapchitaichinh

According to Cao Sy Kiem, president of Viet Nam SME Association, the unpleasant experiences of credit institutions as a result of the economic downturn, stagnant property and stock market, inventories and falling profits during the previous years had made them hesitant to loan money to the SMEs.

The government's guarantee policies for loans to the SMEs were unclear while there was a lack of co-ordination among the government's agencies and credit institutions, resulting in inefficiency in support policies, Kiem said.

Nguyen Tien Dong, Director of the Credit Department under the State Bank of Viet Nam, said that while the stock market of Viet Nam was not developed, loan demand of all short, medium and long terms relied on the banking system. This posed a challenge to the banking system as well, Dong said.

Dong said that the biggest difficulty in providing loans to the SMEs was the lack of transparency in their financial reports as businesses had not paid adequate attention to such things. This caused problems when it came to evaluating their capacity to repay loans.

Their limited capacity due to the small production scale, unstable consumption markets, poor management and human resources, also resulted in the SMEs failing to meet loan conditions and risk management provisions, Dong said.

Le Thi Kim Nhung, head of the Finance and Banking Faculty of the University of Commerce said the SMEs needed support with regard to information accessibility to credit programmes as well as support to promote their products and the markets.

Dang Quyet Tien, deputy director of the Corporate Finance Department under the Ministry of Finance, said that the government was setting up a law which would support the SMEs to get access to cheap capital in the medium and long term.

Statistics showed that the SMEs accounted for more than 95 per cent of the total existing businesses, and contributed 40 per cent of the country's gross domestic product and created 51 per cent of labour.