More Resolute and Comprehensive Export Boost

According to the policy, enterprises of all economic sectors are eligible to the interest rate subsidy with a total value of up to VND17,000 billion (US$1 billion). The policy is expected to reduce difficulties of enterprises in their operations and approach to bank loans. This will also help banks and credit institutions to expand their capital mobilisation activities to supply more cash to the economy.

 

According to the initial calculation, the lending interest rate subsidy programme will provide loans of up to VND420 trillion (US$24 billion) for enterprises, especially exporters, to boost investment and sales.

 

Producers and suppliers to the domestic market are “at a standstill” in the first two months of 2009 as they cannot improve their sales. Mr Nguyen Thieu Uy, Director of Kim Thieu Confectionery Company in Hanoi, said: “The economic crisis forces the people to tighten spending. They only focus on essential and cheap products. Cookies are alternatives; hence, there are a few buyers. If we borrow, we will burden more debts while we cannot sell our products.”

 

Exporters in Vietnam earned only US$3.8 billion in January 2009, down 18.6 per cent, or over US$1 billion, from US$4.9 billion in December 2008 and down 24.2 per cent for a year ago. Meanwhile, importers in the country were estimated to spend US$4.1 billion in the month, down 27.6 per cent month on month and 44.8 per cent year on year. In addition, the national production value also dropped. Enterprises are now only operating to survive.

 

Garment, textile and footwear enterprises are sent into serious hardship because their export order value dipped 30 per cent in January. “If we do not stop operations or cut workforce, we will hardly survive. How need we borrow money at this time,” an official from a company said.

Before the calls for help from enterprises, the Ministry of Industry and Trade has asked the Government to increase the use of export credit instruments to support manufacturing and exporting enterprises.

 

Particularly, the ministry proposed the Government to cut export credit interest rate to 3 per cent per annum, equal to the rate applied to interest rate-subsidised enterprises.

To facilitate enterprises to approach this support policy, the Ministry of Industry and Trade has suggested the Government to allow the Vietnam Development Bank (VDB) to set flexible interest rates for specific groups of borrowers, based on the floor interest rate level introduced by the Ministry of Finance.

 

At the same time, the Ministry of Industry and Trade planned to supplement the list of supported exporting enterprises in accordance with the Decree 151/2006 of the Government. Accordingly, more enterprises will be accessible to the support and lending maturity will be longer, especially for producers and exporters of agricultural, forest and aquatic products and processed industrial products.

 

In this proposal, importers will be also supported with interest rate subsidy to carry out their contracts. Foreign importers will be provided the subsidy when they sign contracts with Vietnamese enterprises. If foreign importers also inked their contracts, the Government will consider their cases, either providing credits or allowing deferred payment. However, this depends on the financial capacity of the Government and the type of goods concerned.

 

When foreign importers buy goods from Vietnamese enterprises, they will be provided a support, which is equivalent to 50 per cent of the interest rate in their lending banks. The grant will be delivered to importers through Vietnamese exporters. The aid is around VND100-150 per USD.

 

With the support to foreign importers, Vietnamese goods will be more competitive on global markets.