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Dinh Vu

Local Economy

Last updated: Friday, May 25, 2018


Capital, Interest Rates No Longer a Problem to Businesses

Posted: Saturday, April 15, 2017

The bank - business connection programme is the fulcrum for the business community and supports businesses to tap and expand domestic and foreign markets. After five years of deployment in Ho Chi Minh City (2012 - 2016), the programme has achieved remarkable results.
Mr Nguyen Hoang Minh, Deputy Director of State Bank of Vietnam (SBV) - Ho Chi Minh City Branch, said the results of the bank - business connection programme in Ho Chi Minh City became even more important and impressive when it was placed in the context of the programme formation and performance in the past five years. During this period, the macro economy faced many difficulties: high inflation and interest rates; challenging business activities of enterprises; and harder access to markets. In that context, the cooperation programme between banks and enterprises to ease capital, interest rate and credit concerns produced direct, positive and effective impacts on the business community.
The five-year programme financed over VND 520 trillion of soft loans to 31,194 enterprises and business households. The programme generated strong ripple effects on the business community in the city, facilitated borrowers to recover, maintain and stabilise production and thus contributed to the city’s socioeconomic growth and development, featured by GDP growth of over 8 per cent a year in the period, higher than the national average. Especially, the programme supported enterprises to ease capital and interest tensions. Particularly, regardless of industries they belong (possibly not included in five priority industries), borrowers enjoyed the same preferential interest rate as five priority industries, hence helping reduce production costs, enhance financial capacity and competitiveness financial capacity of enterprises.
With its high efficiency brought to not only Ho Chi Minh City but also to many other provinces and cities across the country, the bank - business connection programme has to date become a national action programme according to Resolution 35/NQ-CP dated May 16, 2016 of the Prime Minister on business support and development until 2020. This was the most important result of the programme where the ultimate goal is supporting and facilitating enterprises to develop as expected by the Government. To implement Resolution 35 of the Government, the Governor of the State Bank of Vietnam (SBV) issued Decision 1355/QD-NHNN dated June 28, 2016 on the launch of the action plan of the banking sector for improving the business environment, enhancing national competitiveness and boosting business support and development in 2016-2017, with an eye to 2020. Accordingly, in order to support enterprises to develop sustainably, the banking sector will continue to apply stable interest rate policy, flexible exchange rate policy, new transaction model, and simple but secure transaction procedure for enterprises in transacting and using banking services. In 2017, the central bank will continue to cap interest rates at 7 per cent or lower per annum for short-term dong loans for five priority industries (export, SME, agriculture and rural area, supporting industries, and high tech application by enterprises) in order to continue to provide timely supports for business development. “That is why interest rate and credit capital are no longer an issue for enterprises but the biggest difficulty today is their productivity, performance and competition,” he emphasised.
In Ho Chi Minh City, to further promote the efficiency of the bank - business connection programme and boost credit growth, the banking sector will continue to apply stable interest rate policy to customers taking part in the programme. Interest rate will be capped at 7 per cent or lower per annum for short-term dong loans (as specified by the SBV) and at about 9 per cent per annum for medium and long-term loans. Mr Minh said banks in the city registered to lend VND283 trillion for this programme in 2017. Methodically, the SBV - Ho Chi Minh City Branch will continue to disburse credit packages of registered commercial banks and sign cooperation agreements with districts and city agencies to support supporting industries, enterprises with high-tech application, and SMEs. “Especially in 2017, in response to the city’s policy on construction of start-up ecosystem and transformation of business households into SMEs, we will combine the deployment of the bank - business connection programme with these entities to support their development,” he concluded.

My Chau

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