VietNamNet Bridge – A lot of businesses say the preferential interest rates of 17-19 percent only exist on paper, while they never can enjoy such interest rates, and they still have to borrow money at the interest rates of 20-22 percent on average.

Two months after the day the State Bank of Vietnam and many commercial banks announced the application of preferential interest rates of 17-19 percent to some subjects of clients, businesses have affirmed that the announced interest rates have not been realistic.

Hoang Diem, Director of an agricultural materials import-export company in HCM City, came to a bank earlier this month to learn about the procedures she has to follow when she wants to mortgage the house in BInh Thanh district to borrow capital to import materials for the winter-spring crop.

Sacombank has accepted to lend 6 billion dong to her at the interest rate of 20.04 percent. “I can borrow money at 20.04 percent because I am a loyal client of the bank, while other clients would have to bear higher interest rates,” Diem said.

However, she said that the bank has just agreed in principle to the loan, while it is still unclear when the disbursement would be made. Only when the bank can arrange capital for the loan, will the two sides officially sign the credit contract.

According to Van Duc Muoi, Chair of the HCM City Food and Foodstuff Association, the demand of FFA’s member companies for the production season is very high. VIssan, for example, where Muoi is the general director, needs to borrow 400 billion dong. However, very few member companies of FFA can access the bank loans at the interest rates of 17-19 percent. Meanwhile, food and foodstuff companies have been listed as the subjects to the preferential loans.

Nguyen Cong Hoang, Deputy General Director of Vinacafe, also said that while the demand for capital is very high from coffee export companies, none of them can borrow money at the low interest rates announced by commercial banks.

According to Hoang, though banks announced the specific programs reserved for food and foodstuff companies which make products for export, most of the enterprises still have to borrow capital at the sky high interest rates of 23-24 percent.

Who supervise the implementation of the banks’ commitments?

To date, nearly 10 commercial banks, including state owned ones such as BIDV or Agribank, have announced that they would reserve trillions of dong to lend to the enterprises that make products for domestic consumption and export at the interest rates of 17-19 percent. However, businesses have affirmed that such preferential loans remain inaccessible.

A businessman has raised doubts that banks’ announcements about the interest rate reductions just serve as PR campaigns, which aim to polish the images of banks and to satisfy the central bank. Meanwhile, such interest rates have not become realistic.

In fact, no agency has come forward and supervises the implementation of the commitments of the banks.

Late last week, Agribank signed an agreement on reserving 5 trillion dong to lend to the member companies of the Vietnam Cocoa and Coffee Association VIcofa to help the companies collect, process and export coffee in the 2011-2012 crop.

Chair of Agribank Nguyen Ngoc Bao said on Tien phong that this is a normal commercial contract with no preferences in interest rates.

Bao said that it is quite understandable if businesses complain about the capital shortage in a market economy, especially when Vietnam is fighting the inflation and strives to the macroeconomic stability. In the past, the credit growth rate of the banking system was over 20 percent, but the figure is just 12-15 percent this year. Meanwhile, the number of businesses increases year after year, and the economic growth rate is also higher year after year..

The problem is that, according to Bao, a lot of businesses cannot meet the requirements set by commercial banks to be able to borrow money, especially the requirements on the financial capability and the debt payment capability.

Experts say there are many reasons for banks to refuse to provide loans at the interest rates of 19 percent or lower. Firstly, banks themselves do not have much capital to lend because their non-performing loans have been increasing, and they have to reduce lending and focus on recovering debts.

Secondly, a cap of 20 percent has been set for this year’s credit growth rate in an effort to fight inflation. Therefore, banks do not have to push up credit.

Thirdly, some banks decide to lend to smaller banks which need capital, in order to avoid risks.

Source: Tien phong