return icon

High rates hurting businesses, hamper economic recovery

High interest rates have been hurting businesses' ability to invest in ramping up production capacity, said industry insiders and economists.
President of the Vietnam International Arbitration Centre Vu Tien Loc addresses participants at a conference discussing how to better assist businesses in HCM City on Monday. VNA/VNS Photo Hua Chung

High interest rates have been hurting the ability of businesses to recover and invest in ramping up production capacity, said industry insiders and economists.

Economists called for the central government to take measures to bring down the rates, which have been sitting around 10 per cent in recent months.

Tran Viet Anh, director-general of Nam Thai Son Import/Export JSC., said a majority of businesses were not interested in fresh loans but lower rates would be a significant help as they faced lower demand and struggled to keep workers.

"There are businesses with credit room but still reluctant to apply for loans due to high rates, which will contribute to higher operational costs," he added.

Even developers for social housing projects were not immune as they were forced to borrow at regular rates.

Le Huu Nghia, director of Le Thanh Construction JSC., said many social housing projects had to borrow at 14 per cent, roughly the same as other commercial projects. It certainly will not help bring down housing costs in the market.

Despite a directive from the State Bank of Vietnam to give preferential policies to social housing developers, commercial banks have been slow in implementing them, citing a lack of guidance from the central bank.

Nguyen Ngoc Hoa, president of the HCM City Union of Business Associations (HUBA) said as current rates sit above 10 per cent, it's very unlikely for businesses to stay financially viable and stressed the need for measures by the central bank and the government to step in to bring it down in the next six months.

Hoa said a large portion of businesses uses their property assets as collaterals. As the property market has been hit with a cold spell, money have become difficult to come by as banks tightened their purse string.

Professor Tran Dinh Thien, former head of the Vietnam Institute of Economics, said as inflation started to pick up and numerous disruptions experienced by the domestic and the international markets, high rates have been making life difficult for businesses.

He said injecting money through public spending could be useful at a time like this but this channel has been known to be sluggish and inadequate in responding to market changes in a timely manner. Even public fund disbursements aimed at speeding up economic recovery have been slow due to a number of legal and framework barriers.

"There were always the same issues with our financial market and public investment we must address, especially with the corporate bond market and the stock market, to enhance trust and reduce risk across the banking system," Thien said.

President of the Vietnam International Arbitration Centre Vu Tien Loc said the country's long-term economic prospect depends a lot on the development of its business community. He stressed the importance of establishing a more streamlined and transparent framework for the financial market.

"Our businesses can only operate as well as the business environment allows. Improving business performance can only be done along with improving the business environment," he said.

Loc called for the removal of cumbersome and unnecessary business conditions, stronger administrative reform and shorter import/export processing. 

Source: Vietnam News



PM chairs dialogue with youngsters nationwide

Ministry threatens to punish telcos for junk-simcards

The Ministry of Information and Communications (MIC) is intending to mete out punishment with a heavy hand to telecom carriers that do not stop junk sim-cards in the market.

Vietnam moves up in ranking of internet speed

The quality of internet service has improved following instructions by the Ministry of Information and Communications (MIC). Vietnam now ranks 39th globally in terms of fixed internet and 52nd in mobile internet speed.

Banks hold US$8 billion worth of corporate bonds

The proportion of corporate bonds to total assets of commercial banks is not too large but risks still exist, especially if banks hold bonds of weak real estate firms, according to Le Hong Khang from FiinRatings.

Small ship itineraries in Vietnam amongst best Southeast Asia cruises

Small ship itineraries along Ha Long Bay, the Red (Hong) River and the Lower Mekong River in Viet Nam were named among the top four best Southeast Asia cruises by the U.S. travel guidebook series Frommer’s.

Vietnamese stock market's publicity and transparency improved

It is believed that the enhancement will help shore up investor confidence in the Vietanmese stock market after recent scandals.

Investors voice concerns over unresolved pricing for renewable projects

Investors of numerous renewable energy projects demanded solutions to resolve pricing issues in a meeting with Vietnam Electricity (EVN) on Monday.

Hanoi's decade-long effort to clear pavements with no significant results

Despite efforts for 10 years, Hanoi's pavements are still cluttered and have not been returned to pedestrians.

Military inspectors deployed to support understaffed vehicle registration centres

Understaffed vehicle registration centres in Hanoi and HCM City have received support from the military as they struggle to cope with the surge in demand caused by the closure of several centres for investigation in recent few months.

Vietnam to develop policies to adapt to global minimum tax

Vietnam will adjust investment policies to adapt to the global minimum tax rate and remain an attractive destination for investment.

Hanoi drafts to restore local relics with US$593.6 million

Restoring relics and heritage sites is one of Hanoi's goals and is part of the city's efforts to boost its tourism sector.

University ranking group answers criticisms about its transparency

Nguyen Vinh San from the University of Education, a member school of University of Da Nang, and a member of the Vietnam University Ranking Group, said the group has received opinions about the quality and reliability of the ranking.

Foreign associations want dollar interest rate cap removed

Foreign business associations have proposed the State Bank of Vietnam (SBV) remove the U.S. dollar interest rate cap at 0%, reported the local media.

SBV tightens control on corporate bond acquisitions by banks

The State Bank of Vietnam (SBV), the nation’s central bank, is taking steps to tighten control on commercial banks’ acquisitions of corporate bonds.

Retailers slash prices on low-priced smartphones

The consumption of low- and mid-end smartphones has dropped by 50 percent compared with the same period last year, causing difficulties in cash flow for retailers.