Grip loosens on dong loans to SMEs
HA NOI — The State Bank of Viet Nam will loosen regulations which restrict the use of Vietnamese dong by foreign banks to give small-and-medium-sized firms a better chance of obtaining loans, the bank’s governor Le Duc Thuy said last Sunday.
"The loosening will create competition on the credit market so that banking services will be improved," Thuy told young entrepreneurs getting Vietnamese golden star awards at a meeting in Ha Noi last weekend.
Many firms, especially small-and-medium-sized ones, have complained about the difficulty in obtaining loans from State-owned and joint-stock commercial banks.
They also said interest rates on loans were still high, and only short-term loans were available.
The chairman of the Viet Nam Association of Young Entrepreneurs, Truong Gia Binh, said his association wanted government permission to set up a venture investment fund to provide loans to young entrepreneurs.
Thuy said State-owned banks had attempted to increase loan provision to small- and medium-sized firms, but such loans remained small, as 70 per cent of all loans went to State-owned enterprises. Businesses which have been awarded the golden star prize proposed that banks should give priority to them for loans.But Thuy said the golden star award could not be automatically translated into loan priority.
"If you have good trademark and gain prestige in the market, you will have a much better chance of getting loans. Banks will even offer you loans, as they also look for borrowers with good merit and viable projects."
Vietnamese banks will have to seek clients more actively when competition heats up in the banking sector, with foreign banks to be allowed a greater level of deposits and lending in dong, he said.
The association’s members also proposed providing information about development strategies and projects from ministries.
Thuy said the government has announced development strategies for most industries, but they are general and cannot be more specifically catered to each business’ needs. Each business should carefully study the Government strategies and do their own market research before deciding what to invest in, he advised. Although, he admitted that some plans announced by the Government are not well directed. — VNS
