Hard-hit bsinesses still paying high interest on loans

The latest Covid-19 outbreak has pushed enterprises into new difficulties at a time when it is nearly impossible to access cheap capital sources.

Hard-hit bsinesses still paying high interest on loans

The State Bank of Vietnam (SBV) has repeatedly asked commercial banks to slash lending interest rates in order to help clients overcome difficulties caused by the pandemic. However, it is still difficult to access preferential loans from banks.

The general director of a wooden furniture manufacturer in HCM City said he still cannot access any funds from the preferential loans programs launched by banks.

In order to get loans at an interest rate of 7 percent per annum, businesses have to satisfy a lot of requirements, including criteria that is difficult to meet in current conditions.

A mechanical engineering company in HCM City said it is a loyal client of Vietcombank and is listed among good businesses with high credit ranking, subject to preferential loans, but it still has to pay 8.7 percent per annum for 6-month loans.

Vietcombank is one of the big four state-owned banks which are offering lending interest rates that are lower than rates from joint stock banks.

Nguyen Toan Thang, Director of Toan Thang Co Ltd in Hanoi, specializing in mechanical engineering products, said his business can only borrow money from small joint stock banks at relatively high interest rates, while preferential loans offered by large banks are inaccessible because of complicated procedures and requirements.

Most businesses can only get short-term loans, and the average interest rate is 9 percent per annum for six-month loans.

A plastics manufacturing company in Hanoi confirmed that the interest rates offered by banks are 9 percent or higher, which is unbearable for businesses in current conditions. Meanwhile, the interest rate of an older loan is 10.5 percent per annum and banks refuse to cut the rate.

While businesses complain about difficulties in production, most commercial banks reported a profit increase of 55-65 percent in the first quarter of 2021. This was attributed to the big gap between deposit and lending interest rates.

While businesses complain about difficulties in production, most commercial banks reported a profit increase of 55-65 percent in the first quarter of 2021. This was attributed to the big gap between deposit and lending interest rates.

At present, banks pay 3 percent on average for 3-month term deposit, 4-6 percent for 6-9 month deposits and 5.3-7 percent for 12 month deposits.

Meanwhile, they require high interest rates of 8.5 and 9 percent per annum for loans.

“While banks only have to pay 3-5 percent per annum for capital, they charge businesses 9-10 percent. The banks’ preferential credit packages are just an ‘exhibition’, which you can only visit and see, and cannot touch them,” a businessman said.

 

When will interest rates go down?

Nguyen Van Ket, Director of SKD Vietnam, said to borrow money from banks, businesses must have turnover and have collateral for loans, but they are now in difficulties because of the pandemic, and turnover is small. Therefore, it is very difficult to access bank loans at this time.

Businesses want easier access to preferential bank loans and further interest rate decrease.

Vo Tri Thanh, former Deputy Head of the Central Institute of Economic Management (CIEM), said the Covid-19 outbreak has had an adverse impact on businesses, pushing them into a deadlock. In such conditions, credit policies will play an important role in helping businesses overcome difficulties. Capital will help businesses restructure, and make investments to uograde infrastructure and technology to adapt to the new circumstances.

He has urged new, timely financial solutions to support enterprises, especially small and medium sized.

To Hoai Nam, Secretary General of the Vietnam Small and Medium Enteprrises Association, said that capital determines 45-50 percent of businesses’ success.

He has proposed that the State Bank of Vietnam create favorable conditions for businesses to access preferential credit packages by simplifying lending procedures.

Economists said that as the outbreak has reoccured, capital sources among the public are no longer profuse and banks’ capital mobilization growth rate is lower than the lending growth rate. As a result, some banks are facing liquidity problems, which means that the deposit interest rate is under pressure to go up.

Analysts believe a new interest rate floor will be set in the second quarter.

The economy is also under pressure as the inflation rate is likely to increase. If the inflation rate does increase, it will push up deposit interest rates, causing banks to refuse to ease lending interest rates.

As such, the hope for accessing cheap capital seems to be far away. 

Tran Thuy

Home loan interest rates fluctuate

Home loan interest rates fluctuate

Many commercial banks have adjusted their preferential home loan interest rates, ranging from 5.99 percent to 9.5 percent per annum.

Inflation rate rises, new interest rates set

Inflation rate rises, new interest rates set

Some commercial banks have raised deposit interest rates following an 8-year inflation rate high in February. Analysts believe a new interest rate floor will be set in the second quarter.

 
 

Other News

.
Industrial development needs State’s long-term vision
Industrial development needs State’s long-term vision
FEATUREicon  10/07/2021 

To develop the processing and manufacturing industry, the State needs to have stronger policies that focus on domestic enterprises. To have strong policies, it needs strong resources.

Vietnam needs more private corporations
Vietnam needs more private corporations
FEATUREicon  10/07/2021 

After over 30 years of Doi Moi (reform), Vietnam has had large private groups operating in many industries with international stature. There are also Vietnamese USD billionaires, but only a handful.

Civil servants go to office to work, not to show off fashion
Civil servants go to office to work, not to show off fashion
FEATUREicon  10/07/2021 

Dinh Van Minh, Director of the Legal Department under the Government Inspectorate supports the Ministry of Home Affairs' decision on banning civil servants from going to the office in jeans, T-shirts without lapels, shorts and high-cut skirts.

Vietnam should not be slow in opening its door: economists
Vietnam should not be slow in opening its door: economists
FEATUREicon  10/07/2021 

Prime Minister Pham Minh Chinh has said that Vietnam should not adjust the development goals and agrees with the two GDP growth scenarios designed by the Ministry of Planning and Investment (MPI).

Three enchanting beauty spots on the coastal road of Ca Na
Three enchanting beauty spots on the coastal road of Ca Na
FEATUREicon  11/07/2021 

To travel from Ninh Thuan to Binh Thuan, drivers usually choose to go on National Highway No 1. But travel enthusiasts choose another way - the coastal road connecting the city of Phan Rang and Ca Na Port.

Lychees and the agricultural revolution in Vietnam
Lychees and the agricultural revolution in Vietnam
FEATUREicon  09/07/2021 

Farmers in the northern province of Hai Duong have earned revenue of VND1,600 billion in the lychee season this year, the highest ever. 

Minister, officers run against time to bring VND26 trillion support package to people
Minister, officers run against time to bring VND26 trillion support package to people
FEATUREicon  09/07/2021 

Minister of Labor, War Invalids and Social Affairs Dao Ngoc Dung said agencies and localities cannot be slow in disbursing the VND26 trillion support package.

Exports increase sharply, but concerns persist about trade deficit
Exports increase sharply, but concerns persist about trade deficit
FEATUREicon  09/07/2021 

Vietnam’s merchandise trade balance in the first half of the year resulted in a trade deficit. Last year, it had a trade surplus for the same period.

Zero Covid and the new quarantine strategy
Zero Covid and the new quarantine strategy
FEATUREicon  08/07/2021 

The Prime Minister’s approval to pilot home quarantine for F1 cases instead of concentrated quarantine is considered a turning point in Covid-19 prevention in Vietnam.

Unemployment in the time of Covid-19
Unemployment in the time of Covid-19
FEATUREicon  08/07/2021 

The unemployment statistics in Vietnam are always controversial.

Opening the huge market for e-sports
Opening the huge market for e-sports
FEATUREicon  08/07/2021 

Along with the development of the game market and digital entertainment platform, eSports has potential for development in a diverse and highly globalized ecosystem.

Vietnam takes a big step forward in international publications in social sciences
Vietnam takes a big step forward in international publications in social sciences
FEATUREicon  08/07/2021 

About 10 years ago, a mathematician said that Vietnam did not yet have social science study works. The comment seemed to be a bit harsh, but it did make sense, especially when it comes to international publications.

Vietnam needs to cure ‘stagnation disease’ to 'take off'
Vietnam needs to cure ‘stagnation disease’ to 'take off'
FEATUREicon  11/07/2021 

Prime Minister Pham Minh Chinh, after taking office, has been paying high attention to fostering the public apparatus’ proper implementation of their functions and tasks, especially the fulfillment of the great responsibilities assigned to them.

Vietnamese children need safer environment in cyberspace
Vietnamese children need safer environment in cyberspace
FEATUREicon  07/07/2021 

Children often spend a lot of time learning, playing and exploring on the internet. Besides the undeniable benefits, unseen threats are also part of cyberspace.

Vietnam’s retail market: global giants unexpectedly fall short
Vietnam’s retail market: global giants unexpectedly fall short
FEATUREicon  09/07/2021 

Vietnamese have turned the tables to become dominant in the retail market, while many foreign giants have had to leave.

Farm produce exports: specialties reach new markets
Farm produce exports: specialties reach new markets
FEATUREicon  08/07/2021 

Despite Covid-19, Vietnam’s farm produce exports still achieved impressive results, especially litchis.

Newspapers and social media: cooperation or confrontation?
Newspapers and social media: cooperation or confrontation?
FEATUREicon  07/07/2021 

VietNamNet spoke with Nguyen Ngoc Chu, a respected mathematician, who is a well-known Facebooker whose posts on his page attract at least 1,000 likes each.

Is Vietnam’s Covid-19 treatment Favipiravir drug effective?
Is Vietnam’s Covid-19 treatment Favipiravir drug effective?
FEATUREicon  07/07/2021 

Vietnam has never included any antiviral drugs in its Covid-19 treatment regimen because of unclear and unproved effectiveness of the drugs in clinical trial results.

What’s behind the high GDP growth rate?
What’s behind the high GDP growth rate?
FEATUREicon  07/07/2021 

The high GDP growth rate of 5.64 percent reported for H1, when a number of large cities and provinces were under social distancing, businesses had to close, and people lost their livelihoods, has puzzled many people.

Strengthening tools to protect children in cyberspace
Strengthening tools to protect children in cyberspace
FEATUREicon  05/07/2021 

The strong development of the Internet and social networks has made children become digital citizens early, which brings many benefits in the service of learning, entertainment, and enhanced social interaction.

 
 
 
Leave your comment on an article

OR QUICK LOGIN