SMEs face difficulties in accessing bank loans

Photo: VNA

Only 30 percent of small- and medium- sized enterprises (SMEs) are eligible for bank loans, Deputy Director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh said during a workshop held in Hanoi on September 24. Economist Nguyen Dai Lai pointed out that low credit ratings and competitiveness have hindered their access to loans. According to Cao Sy Kiem, Chairman of the Vietnam Association of Small and Medium Enterprises, bank loans have been a major capital source for SMEs. However, some are unable to fulfil legal terms while others lack the competency to utilise the money effectively. Cumbersome procedures and inequitable policies are also barriers, he said, adding that the Government has recently stepped in to address the issues but difficulties remain. Dr Nguyen Dai Lai and Dr Le Tham Duong from the Ho Chi Minh City Banking University agreed that proving their ability to settle debts is essential for SMEs to enhance their access to bank loans. There are more … [Read more...]

Credit incentives needed for farm export in Mekong Delta

Experts and representatives of businesses in the Mekong Delta province of Ben Tre gathered at a workshop on April 7 to call for credit incentives for local agricultural export. General Director of Ben Tre Export and Import Joint Stock Company (Betrimex) Tran Van Duc highlighted the need for specific credit packages targeting agricultural production, processing and export. Representatives from the Luong Quoi coconut processing company suggested the Government make amendments to financial policies on developing agricultural and rural areas, with the State Bank of Vietnam (SBV) lowering the annual USD lending interest rate ceiling. Meanwhile, Dr Le Tham Duong from the University of Banking emphasised the role of farming households in the development of the region, suggesting that credit incentives should be devised to increase their agricultural production. SBV Deputy Governor Nguyen Kim Anh valued the potential of agricultural production and lauded efforts made by local … [Read more...]

Vietnam cbank moots $94k individual home loans for decent income public servants


Vietnam's central bank is studying the feasibility of offering a new home loan package that would allow public servants with a stable income to borrow up to VND2 billion (US$94,135) each at preferential interest rates to purchase condominiums or terraced houses. The beneficiaries of the proposed package include public officials, civil servants, and members of the armed force whose family income is around VND25 million ($1,177) a month in total, Nguyen Tien Dong, head of the credit department under the State Bank of Vietnam (SBV), told Tuoi Tre (Youth) newspaper in an interview published Friday. … [Read more...]

Borrowers Need to Focus on Financial Information Transparency to Better Access Bank Loans


The corporate finance situation determines the accessibility of enterprises to capital sources. Therefore, to effectively access lending sources, they must have clear and transparent financial reports and continuous corporate revaluations to adapt to market development. This was agreed on by economic experts at a workshop entitled "Banks boost credit growth and opportunities for businesses in 2014" organised by the Ho Chi Minh City Branch of the Vietnam Chamber of Commerce and Industry (VCCI-HCM). Giving remarks on the current status of small and medium enterprise (SME) system, Dr Cao Sy Kiem, Chairman of Vietnam SMEs Association, said SMEs currently account for 95 - 97 percent of total enterprises active in the country. However, up to 90-95 percent of companies have to rely on bank loans to continue operations. Unfortunately, given growing bad debts and overdue debts, they are unlikely to be able to access new loans. He said the biggest obstacle to SMEs' access to bank loans rests in … [Read more...]

SBV partially relaxes regulation after blasts


The State Bank of Vietnam (SBV) on Thursday announced that it has amended the new draft law which will allow the local people to give away or donate all foreign currencies, including the popular US dollar, within Vietnam. According to information recently posted on the website of the SBV, the board responsible for drafting the new decrees on foreign currency management from the central bank has taken the move after receiving a lot of comments, suggestions, and even criticisms from local experts and people. "The editing board for the new decree has realized that it is reasonable to maintain the people's right in giving away or donating foreign currencies, which stays within the framework of the provisions of the National Ordinance on Foreign Exchange," according to SBV website. "The ordinance allows individual owning foreign currencies to deposit, receive principals and interests in a foreign currencies." The new draft decree, after being finalized, will replace Decree No.160 … [Read more...]

Commercial banks told not to open more branches

VietNamNet Bridge - The State Bank of Vietnam believes that the number of bank branches and transaction offices is now "bigger than enough." However, banks still have been trying to set up more branches. According to the HCM City branch of the State Bank of Vietnam, there are 2,102 transaction points in HCM City, including 144 bank branches and 628 transaction offices of HCM City-based banks. The other 59 bank branches and 419 transaction offices belong to the banks headquartered in other localities. Of these, state owned banks have 96 branches and 400 transaction offices located in HCM City. As such, there are over 6.5 transaction points in every ward, commune or town in HCM City. A bank branch director in district 3 said the competition among banks has become stiffer than ever with more and more bank branches newly set up, especially in key areas. In principle, banks have to conduct market surveys before deciding to establish a new branch. They need to learn about the population … [Read more...]


Local firm wants to take over Nam Can Port A local company whose name is not yet revealed has expressed its desire to take over Nam Can Port, which has been inactive for years as its operator is struggling with financial distress, said a senior source from the government of Ca Mau. Located on the left bank of the Cai Lon River in Ca Mau's Nam Can District, Nam Can Port was upgraded from a river port to a seaport in 1995 with total investment of over VND111.6 billion. The units under the Ministry of Transport were in charge of design, supervision and execution. As per the design, Nam Can Port is capable of catering to vessels weighing 5,000-12,000 tons and handling 800,000 tons of cargo every year. After receiving the port from the transport ministry, the government of Ca Mau set up a company to operate the port. In late April 2006, at the request of Vinashin, the provincial government handed over Nam Can Port to the State-run shipbuilder. When Vinashin ran into troubles, the port … [Read more...]

Risks from high interest rates

Hanoi-based Khai Thai Investment Advisory Company Limited was reported to offer customers 3 per cent per month interest rate, tantamount to 36 per cent per year, five times more than current mobilising cap at local banks.

With monthly interest rate reaching 3 per cent, investment advisory companies are luring huge capital amounts from the community which prove highly risky ventures since these monies are mostly poured into gold and forex trade but not serving production or business activities. Similarly, in the recent past Vipro Investment JSC, also based in Hanoi, launched an appealing 'entrusted investment' package where the customers would be given interest rates from 2-3 per cent per month (tantamount to 24 to 36 per cent per year) for their deposits from three month to 24 month terms at the company. The country is now home to several dozen investment advisory firms providing entrusted investment services with similar interest rates to woo customers. Usually, these firms require their customers to deposit money at least three months with a minimal amount of VND50 million ($2,380). Such firms were reported to lure several dozen billion Vietnam dong (from hundreds of thousands to millions … [Read more...]

Securities companies languishing for the death

Stretching out on deathbed The decision to dissolve the Cho Lon Securities Company CLS was declared in the shareholders' meeting's resolution in March 2013.

VietNamNet Bridge - Incurring big losses and heavy debts, securities companies still have to spend money to maintain their operation until the day they are allowed to "die." The resolution said the company would have six months to solve existing problems, terminate contracts and settle debts, fulfill tax duties and payment to workers. Nguyen Van Liet, General Director of CLS, said the company has settled the problems, but it still cannot declare the death, because the procedures of transferring 1,000 clients' accounts to other securities companies have not been fulfilled yet. These are the accounts of individual clients, where there are only several accounts left and the owners do not intend to go to the company to follow the procedures. As a result, CLS still cannot terminate its membership status at the Hanoi and HCM City Stock Exchanges. What it can do now is waiting for the instructions from the Vietnam Securities Depository Center. The same thing has been happening with … [Read more...]

SBV unexpectedly raises dollar prices, exporters leap for joy

On August 7, the State Bank Exchange unexpectedly raised the dollar buy price from VND20,826 to VND21,000 per dollar.

VietNamNet Bridge - The move by the State Bank of Vietnam of raising the dollar buy price has been commented as showing its determination to keep the dong/dollar exchange rate stable. In fact, the VND21,000 per dollar threshold was set up on the market a long time ago already. However, any move by the State Bank would have impacts on the market immediately. On the same day, commercial banks raised their buy prices after two days of reduction. Vietcombank and BIDV, for example, bought at VND21,040 per dollar, an increase of VND30 over August 6. Analysts have commented that the State Bank tries to buy more dollars not only in order to increase the foreign currency reserves, but also to stabilize the exchange rate. With the intervention by the central bank, the dollar price will not be decreasing further. In the past, the State Bank many times succeeded in stabilizing the exchange rate by applying the same measure. On April 29, it raised the buy price by VND214 per dollar from … [Read more...]

National economic challenges persist in 2013

(VOV) - International and local economists along with Vietnamese business representatives gathered in HCM City on March 1 for a seminar to discuss 2013's opportunities and challenges for the national economy. Experts believe achieving a 5.5 percent GDP growth rate while minimizing inflation will require addressing the problems arising from bad debts, excess stock, and the underperforming real estate. Delegates said that the State's economic policies should concentrate on regaining the market's trust. Relevant agencies should undertake economic and business restructuring to improve the health of the market and facilitate the national economy's transition to a growth model. They emphasised the importance of removing the hindrances posed by bad debts and helping businesses have easier access to loans to fund their operations. Dr Le Tham Duong, Head of the Banking University's Business Administration Department in HCM City, reiterated that the State should honour its … [Read more...]

Realty association blasted for new tax proposal


Economics experts have strongly criticized a proposal made by the Ho Chi Minh City Realty Association (HoReal) that interest earned from bank deposits should be counted as a taxable personal income. Interest earned from deposit worth from VND500 million (US$24,038) and above must be taxed as a personal income, in order to "drive the money flow from personal savings to economic production," the HoReal said in a document filed to the Prime Minister and relevant departments and agencies. "Vietnam is among the very few nations that do not tax deposit interest," HoReal chairman Le Hoang Chau told Tuoi Tre, when asked why the association made such a controversial proposal. With a deposit of VND10 billion, one can earn as much as VND1 billion on a monthly basis, and this money is not taxed, he said. "In the meantime, if the money is put into production, it will generate jobs and contribute to the state budget, as well as gaining incomes for its owner. "Not levying tax on the … [Read more...]

What Vietinbank seeks when selling stakes to Japanese bank?


VietNamNet Bridge - Commenting about the deal of Vietinbank, one of the Vietnamese biggest commercial bank, sells stakes to The Bank of Tokyo - Mitsubishi UFJ (BTMU), the Vietnamese bank has obtained big gains. The benefits for the bank The Vietnamese partner proves to be reticent about the huge deal, though its President--Pham Huy Hung, admitted that the presence of BTMU in Vietinbank would help the bank strengthen its financial capability. More importantly, with the multi-sided technical and business cooperation, Vietinbank would be able to take full advantage of the important resources to improve its corporate governance skill. Banking experts say the deal would bring some benefits to Vietinbank. Firstly, Vietinbank can sell its stakes at good price which is tens of percent higher than the current market price of the shares. Of course, this proves to be a commonly seen thing in the bank merger and acquisition deals, where the prices were set at 50-100 percent higher … [Read more...]

Bad debt settlement – key to bank restructuring


(VOV) - The success of the commercial bank restructuring process rests heavily on the settlement of bad debts that continue to obstruct capital mobilisation for the national economy. Settlement of bad debts and economic restructuring Bad debts weigh on local banks and businesses Bad debts hinder bank restructuringOver the past 20 years of Doi Moi (Renovation), the shortcomings of local commercial banks have been exposed, particularly through poor management, inadequate human resource training, weak liquidity, and rising bad debt ratio. In 2013, the banking sector is set to reduce bad debt ratio in commercial banks. Two years ago, the State Bank of Vietnam (SBV) approved three M&A deals to improve the operations of several banks, including Ficombank, TinNghiaBank and Saigon Bank (SCB) and rearrange credit organizations in the process of economic reform. Dr. Dao Duy Huan from the University of Finance says the restructuring of the banking sector is slow going due to snags in … [Read more...]

Remittances to turn heads


Remittances sent to Vietnam this year are expected to substantially exceed last year's total of $9 billion. The money remitted by overseas Vietnamese and guest workers in the first half of the year amounted to $6.3 billion, or 70 per cent of the total amount last year, according to the State Committee for Overseas Vietnamese. Meanwhile, the amount of foreign remittances typically sent home in December and January often increase strongly as more overseas Vietnamese return to the motherland during the time. A large proportion of the remittances in recent years came in the fourth quarter, said Nguyen Hoang Minh, deputy director of the State Bank of Vietnam's Ho Chi Minh City Branch. Therefore, this year's result should be substantially higher than last year. Remittances sent to or through the Ho Chi Minh City alone in the entire 2012, Minh said, were expected at reach $3.4 billion, compared with $3.2 billion last year. Around 4.5 million Vietnamese, including 500,000 guest … [Read more...]

Just the start: analyst expects more bank mergers


The central bank has approved the merger of three small banks - Ficombank, Saigon Commercial Bank, and Vietnam Tin Nghia Bank - that are mired in liquidity problems. The restructure of banks will continue for the next three to five years since some lenders remain weak, Dr. Le Tham Duong of the Banking University of Ho Chi Minh City tells Thanh Nien Weekly in an interview. Vietnam needs to implement the restructure of both small and large banks in a drastic manner, an economist says. … [Read more...]

Banks breach rate cap to attract deposits

HCM CITY (VNS) — Small and large banks nationwide are competing with one another to attract much-needed deposits and improve their liquidity. Although the interest rate on dong deposits was capped at 9 per cent per year by the State Bank of Viet Nam, several commercial banks have still been illegally raising interest rates on loans in both Vietnamese dong and US dollars to improve liquidity. Small banks are offering much higher interest rates than larger ones, with rates going up to 11-13 per cent per year for deposits in dong based on their terms. … [Read more...]

No investment channel both safe and attractive for now


VietNamNet Bridge – The last months of year are always the time for the capital mobilization channels to activate. However, things are quite different this year. Experts still keep hesitant to give predictions about the most lucrative investment modes. Dr Le Tham Duong, Dean of the Business Administration Faculty of the HCM City Banking University, said of the three most popular investment channels – real estate, gold and securities, he still cannot see any really good investment channel for now. … [Read more...]

Banking expert denounced of committing plagiarism


VietNamNet Bridge – Dr Le Tham Duong, Dean of the Business Administration Faculty of the HCM City Banking University, a well-known economist, whose name appears regularly on mass media, has been alleged as committing plagiarism since 2008. The banking expert called the plagiarist … [Read more...]

Cheap credit packages raise doubts among lenders


Eximbank has shocked other bankers and businesses when announcing the credit program which offers to lend to businesses at the surprisingly low interest rate of 7 percent per annum. However, the super-cheap capital package has raised doubts among businesses. 7 percent or 13 percent per annum? Thanh Nien has cited the latest report by the State Bank of Vietnam, reporting that the current lending interest rates are between 14 and 16.5 percent on the market. The lowest interest rates are now 16-18 percent for medium and long term loans, and 12 percent for short term. While a lot of businesses complain that they cannot access the loans at the low interest rate of 12 percent per annum, Eximbank has unexpectedly announced the credit packages with the reference interest rate of 7 percent per annum. Those, who join the program, would have to sign a contract, committing to bear the exchange rate fluctuation of 3 percent at maximum (in case the dollar price increases by 3 percent by … [Read more...]