Banks difficult to loosen credit for SMEs

08-Jun-2016 Intellasia | Dau Tu Chung Khoan | 6:00 AM Print This Post

Recently, thinking about the importance of private sector enterprises in the overall economy has made important changes. However, according to economic experts, in order to help these enterprises grow, their capital needs should have maximum support, but solving this problem requires a “different vision” from the bank groin.

Sharing at a seminar on capital some solutions for small and medium enterprises (SMEs) in the period of global trade, as the trade agreement FTA, effective TPP was held recently, GS. Dr Nguyen Mai said that if the bank did not change the look of the access and the extension of credit to the SME group, it will hardly be successful in credit growth in the enterprise segment.

According to Mai, it is needed to be supported for the project has the potential of SMEs, instead of focusing on large enterprises. Now, many large enterprises fell into the bad debt crisis and had to restructure its debt… So, should not intervene in the restructuring of debt and support for large enterprises as insolvent, which should set Mid-capital support for SMEs with potential growth.

At the same view of him, Dr Tran Dinh Thien, director of the Institute of Economics Vietnam said that the opportunities that SMEs bring will be great, especially in recent times, thinking about the importance of this sector in the overall economy have more significant changes. The prime minister used to emphasize that the private sector was the driving force of development, not criminalised, declared war on the “licenses”, cutting procedures, strong support entrepreneurship programme (start-up funds). Vietnamese business environment has many issues need to be reformed, where the nature of the current policy is to “remove”, but not really a change in the mechanism, so the problem is to look straight at reality in order to change the “nature” there.

About the businesses, said by Nguyen Hoang Cung, a business leader from Can Tho expressed that in business operations, enterprises had had to mortgage virtually all assets to get loans. If you want to expand the business, it is necessary to have more capital, but because collateral is not much, so it is very difficult to access funds from banks.

“SMEs are always in need of capital, because they themselves had partners of debt. Therefore, banks need to look at the feasibility of capital projects to support, rather than just focus on the collateral. Because of difficulties in accessing bank loans, some SMEs have to seek financial companies to borrow at high interest rates” he said.

Other cases, a new graduate school of Dong Thap province said that he needed about 100 million for development projects their tours. But because his family could not afford, while the leaders of the province only answer as a moral support, not financial support.

It can be seen, in this case, accessing to bank loans in order to realise the idea of starting a business is extremely difficult.

Exchanges around this issue, the representative of Vietcombank said that the project was also so, but it is able to be financed was another matter that requiring the project must satisfy several conditions, such as authenticity and factual basis of the project, there must have an especially mortgages and repayment ability.

Dr Nguyen Quang Thang, member of the Standing Committee for consultation policy (TAC) of ASMES said, so far, the country had about 535,000 SMEs, accounting for 97 percent of the total number of active enterprises. Block this company contributed 45 percent of GDP, 31 percent of total revenues and 35 percent invested by the business community in general, attracts more than 5 million jobs and contributing nearly 50 percent to the economic growth of the country annual household.

In the next 5 years, the SME sector have aims such as: the establishment of new enterprises is 450,000; Some businesses operate is 700,000, accounting for 98 percent of enterprises across the country; the share of investment accounted for 50 percent; labour rate of 50 percent and contributed 35 percent to the budget. However, these agents cause difficulties, delays for this DN block is also shown, namely the tightening of credit conditions (reduced credit supply, interest rates rise and credit standards tougher); limited financial capacity; competitiveness, technology is weak…

According to Thang, SMEs are currently facing very closely credit conditions, while it is difficult to search for alternative sources of capital. Therefore, the need to promote micro-credit providers for businesses, as well as ideas for starting a business is necessary, along with measures such as the development of financial products with low interest rates, repayment time stretching, loosening the conditions on collateral…


Category: Finance, Vietnam

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