After the government declared the 29 trillion dong bailout package, HCM City authorities have announced it would reserve 30 trillion dong to rescue local businesses. However, it is not easy to access the support.
Banks still say “no” to businesses’ proposal to provide loans
The common characteristic of two bailout packages is that the generous packages may not reach many businesses, which really need help. In other words, banks have profuse capital to lend, but businesses cannot meet the requirements to borrow.
In general, banks would require collateral for the loans. However, the majority of businesses now do not have assets to mortgage any more, because they used the assets to borrow other loans already.
An executive of an enterprise in the HCM City Hi-tech Park said the enterprise spent 10 billion dong in 2010 to buy machines and equipments. These were modern and brand new products with associated invoices. However, the bank only accepted to provide the loan worth 30 percent of the equipments’ value.
The bank explained that it needs to follow the measures to ensure the low risk for the loans. If the company takes loss in its business, the mortgaged assets would be sold by the bank to take back capital. However, it’s is really not easy to sell the equipments.
Commercial banks all say that in principle, they would disburse money if borrowers can show their feasibility of the investment projects. However, the above said executive complained that even if the projects are highly appreciated by experts, credit officers would still refuse to lend.
The problem, according to him, is that credit officers only have knowledge in finance, while do not understand the matters in specific fields.
In HCM City, to date, less than 100 enterprises out of the 140 operational enterprises in the locality have accessed the bailout package worth 30 trillion dong. The total sum of money enterprises want to borrow is less than 10 percent of the total sum of money.
The majority of the businesses seek new loans from the bailout package, because they want money to pay back the old loans they borrowed at very high interest rate of 20 percent per annum.
Businesses now complain that their biggest problems now do not lie in the lack of capital or high interest rates, but in the difficulty to get bank loans. What businesses want for now is a flexible credit policy to be applied by banks which allow lending to businesses without collateral.
Businesses keep indifferent to bailout packages
While many enterprises cannot borrow money because they don’t have collateral, many others do not intend to borrow capital at this moment. It is simply because they still do not have feasible business projects. In the context of the low demand, the businesses believe that it’d better to keep production at moderate level and wait for their opportunities, while expanding production should not be a thing to be considered for now.
The HCM City Business Association said emails about the bailout package were sent to 8000 association’s members, while only less than 100 businesses have shown their interest in the package. This shows that while businesses still lack capital, they do not intend to borrow loans from banks.
The representative of the association said they cannot see any special feature of the bailout package which can help settle the problems. If businesses can satisfy the requirements set up by banks, they would contact banks themselves for loans, instead of borrowing capital through the city’s bailout package.