Businesses Encouraged to Join Global Agriculture Value Chain with Credit Mechanism

10:21:28 AM | 22/10/2019

The State Bank of Vietnam (SBV) has defined agriculture and rural areas as one priority area for financing. This information was revealed by the Credit Department, SBV.

The banking sector has issued and implemented many policies to channel credit flows into agriculture and rural areas, and strengthen connectivity along high-tech agricultural value chain to realize agricultural restructuring goals. In 2015, the SBV submitted to the Government for promulgation Decree 55/2015/CP, which stipulated many preferential policies for businesses and organizations, including regulations managing credit flows in agricultural production; and regulations on the use of properties formed from project capital and high-tech agriculture business plans as security assets for loans.

The SBV has also promptly issued circulars on credit incentives for investment in agriculture and rural areas, including value chain-based agricultural production. These regulations are considered very preferential, for example, imposing the ceiling interest rate of 6.5% per annum for short-term dong loans, 1-2% lower than lending rates for various ordinary commercial loans; allowing credit institutions to offer short-term loans in foreign currencies to customers to execute business plans that make exports to earn foreign currencies which will be used to repay the loan; and allowing agricultural exporters to select appropriate loans. Besides, many simplified administrative procedures have helped cut costs and ease business access to bank loans for production.

Reportedly, the banking industry is piloting loans for high-tech export agricultural production model (Resolution 14 NQ-CP dated March 5, 2014) with specific policies such as interest rates lower than ordinary commercial loans by 1- 1.5% per annum, and loan limits equal up to 90% of the plan value. In case customers do not have enough security assets, banks can lend unsecured loans, but cash flows will be controlled by them.

The launch of the above programs and regulations has initially helped formulate high-tech agricultural production models by value chains in localities, helped spur local economic restructuring and agricultural restructuring. Based on recent implementation outcomes, the SBV will advise the Government to add credit policies for agriculture and rural development and incentive policies for development of high-tech supply chains in agriculture.

Thanh Nga