Southern hub looks to get firms moving

June 23, 2012 | 14:54
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Loans provided by Ho Chi Minh City banks and credit institutions received a slight bump between January and June.

They amounted to VND779 trillion ($37.45 billion), a 1.96 per cent rise against the end of last year, said Nguyen Hoang Minh, deputy director of the city's State Bank.

By the end of May, about 85 per cent of the total lending were classified as business loans for companies and enterprises, he said. Among them, small- and medium-sized enterprises (SMEs) received VND16.2 trillion ($778.8 million).

On June 5, leaders of the southern economic hub and State Bank agreed upon a credit package totalling VND30 trillion ($1.44 billion) with preferential interest rates and with immediate disbursement, for the prioritised four groups of companies.

The four groups are SMEs; agricultural and rural companies, export-oriented businesses and supporting industry companies.

However, nearly 80 companies registered to borrow more than VND2,200 billion ($106 million), according to the city's Department of Industry and Trade.

A department representative said the biggest problem faced by city businesses was large inventories.

Meanwhile, the central bank's Ho Chi Minh City Branch suggested the city's administration ask the Vietnamese government to allow banks to freeze debts at these four groups of companies so they could access new loans.

The branch's deputy director Minh told a People's Council meeting last week that many businesses needed new loans to clear off bad debts.

He said the ratio of bad debts at banks and credit organisations in the city increased constantly from this February, from 3.6 per cent that month to 3.9 per cent in March, 4.2 per cent in April, 5.3 per cent last month and 6 per cent this month.
However, the city's banking system liquidity has improved since the end of last year. Deposits of 14 Ho Chi Minh City-headquartered commercial banks have increased by almost 18 per cent to VND19.9 trillion ($960 million).

Total deposits at the 14 lenders rose by 8.87 per cent over the end of last year. The current ratio between total outstanding loans and total deposits is 68.3 per cent, much lower than 92.7 per cent late last year.

By Tuong Thuy

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