VietNamNet Bridge - Small and medium enterprises (SMEs) find it difficult to get capital from the stock market or banks. They have to pay more for capital costs, because they are not priority subjects in capital contribution.

The Vietnamese stock market has been operating for 15 years, but businesses still have been mostly accessing capital through bank loans.

Johan Nyvene, CEO of HSC Securities, commented that it was not easy for enterprises with annual turnover of over VND500 billion, while it was very difficult for enterprises with turnover of less than VND500 billion to mobilize capital from the public through shares or corporate bond issuance.

The problem of the Vietnamese stock market lies in the liquidity for both shared and bond markets.

Eighty-five percent of the investors in the stock market are individual investors and small-scale financial institutions, while the other 15-17 percent are foreign institutions. 

Individual investors just play the ‘game of chance’. Meanwhile, foreign institutions just try to make ‘quick hit'.

SMEs find it difficult to get capital from the stock market or banks. They have to pay more for capital costs, because they are not priority subjects in capital contribution.

Vietnam has a capital market, but there are not many sellers and buyers in the market. Sellers fear they mistakenly sell at a loss, while buyers fear they may buy at unfair prices.

Vietnam’s national credit indicator is still lower than other ASEAN countries, with the credit ranking at BB-. This explains why the stock market lacks market makers and big investment funds such as pension funds and hedge funds, and why Vietnam is not included in foreign institutions’ list of priority bond investment addresses. 

Meanwhile, there are very few shares of large corporations such as MobiFone and Vietnam Airlines available in the market to attract foreign investors.

Large corporations are not interested in mobilizing capital through the stock market because they have had many opportunities to access preferential loans in the last two years.

Businesses would rather borrow money from banks than issue shares. And if businesses continue to prefer borrowing money from banks, the stock market will continue lacking valuable commodities.

SMEs rank at bottom in the list of subjects to receive capital

Though a series of commercial banks have announced they now target SMEs to provide loans, SMEs still come after state-owned enterprises (SOEs), large corporations and family businesses on the banks’ list of subjects to lend, and therefore, SMEs’ capital costs are always higher.

However, a banker admitted that SMEs find it difficult to access bank loans not only because of their low credit ranking, but also because banks cannot ease the lending interest rates as bad debt still cannot be settled.


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