While some major lenders in Vietnam have lowered interest rates, experts say not a lot of businesses have benefited from the cuts.
Vietcombank, Vietnam’s third largest partly private lender, reduced its interest rates on dong loans by two percentage points last week. The rate for exporters, for instance, now stands at 16 percent annually.
Deputy general director Nguyen Thu Ha said the new rates only apply to short-term loans and are restricted to a few clients, including exporters, agricultural producers and small businesses. Companies in other sectors still must pay up to 20 percent, she added.
State-owned Bank for Investment and Development of Vietnam, also known as BIDV, has made five rate cuts since last September, bringing its interest rates to as low as 14.5 percent. However, only companies in priority sectors with a good track records are eligible for the lowest rates.
Cam Van Luc, senior consultant at the bank, admitted that while interest rates are falling, how it will affect the economy remains to be seen.
“Banks are very cautious and selective with clients,” he said.
Luc said many businesses are struggling with high borrowing costs, calling for measures to bring down interest rates below 15 percent. He said improved liquidity at banks and easing inflation would allow banks to do so.
A credit official at Vietcombank speaking on the condition of anonymity said very few companies have access to low interest loans currently being offered by major banks due to their strict lending policies, including a rule that requires corporate clients to sell foreign currencies back to the banks.
Interest rates of 16-17 percent may be bearable for some exporters, but for many other companies that need to take out huge loans, such rates are too high, the official said.