Credit Support for Exporters: Many Incentive Programs

1:39:22 PM | 6/5/2019

Orient Commercial Joint Stock Bank (OCB) officially launched a VND3 trillion soft loan package exclusively for small and medium-sized enterprises (SMEs) engaged in exporting activity and supply chains. The interest rate is 7% per annum.

This package is expected to be disbursed over three months, from April 1 to June 30, 2019. The preference term is 12 months. In addition to soft interest rates, borrowers can experience more incentives on banking service fees in international payments, guarantees and other payment and money transfer services.

This loan package is hoped to timely supplement working capital for borrowers, especially when Circular 42/2018/TT-NHNN of the State Bank of Vietnam (SBV) starts to tighten short-term loans in foreign currencies for settling payments to foreign countries to import goods and services for domestic demand. Soft loans are considered effective alternatives.

Like OCB, many other lenders also have import-export support programs. An Binh Commercial Joint Stock Bank (ABBank) launched a prior delivery export funding program. This finances working capital for exporters to execute export production plans, with export revenue used as guarantee to the loan. Accordingly, with security assets, the loan may reach 90% of L/C value and 80% of foreign contract value. Without collateral, the loan may equal to 80% of L/C value and 70% of foreign contract value.

Besides, ABBank lends exporters after delivery. Accordingly, the bank will advance money to customers to export goods while waiting for (deferred) payment from importers/foreign banks, helping them with sufficient funds for business.

Earlier this year, SHB Bank launched a product called Export Bills Under Letter of Credit. With this product, the bank will keep export documents and collect money from the third parties. This is also a form of credit financing because the bank will make advance payment to exporters by keeping undue bills. With the loan equalling up to 98% of the bills value on the document and a 6-month discount period, this will be a good opportunity for exporters to promptly supplement working capital and increase capital turnover.

Many other banks such as HDBank and TPBank are also financing exporters through document discount products. For example, at TPBank, exporters can mortgage its shipment formed from the opening L/C plan. The loan may reach 95% of the document value. Besides, exporters are supported to issue all types of L/C with a deposit rate from 0 - 15% by this lender.

Besides, export processors that use imported inputs are also supported through the usance payable at sight letter of credit (L/C UPAS) method launched by TPBank. This option is strongly responded by importers and exporters because it helps them settle payment in advance for beneficiaries in foreign currencies with low interest rates, and gives them a maximum term of deferred payment to 360 days. This reduces pressure about foreign currency and costs for them.

Particularly for enterprises using domestic inputs, TPBank is offering a soft credit package of VND1,000 billion. Accordingly, they can borrow 1% less than the ordinary interest rate to purchase inputs for export processing.

Financial solutions and low-rate loan packages have helped businesses with easier access to capital sources at lower costs. Indeed, many SMEs currently lack collateral for loans while their financial data are not transparent and their business performance is low. These factors limit access to credit sources for SMEs.

Mr. Nguyen Dinh Tung, General Director of OCB, said, funding SMEs along value chains is a solution to improve enterprise capacity and expand modern operation to join more deeply into the global economic system. Technology-powered lending process and automated services will be a source of life for SMEs to grow.

Quynh Chi