Freeing up Bank Capital to Help Businesses

At the conference, representatives of VCCI, OCB and economic experts shared and pinpointed the impacts of policies on the economy and the business community. They also delivered forecasts and practical advice to aid businesses in capital management techniques and methods to access and use capital efficiently and effectively.

 

Mr Vo Tan Thanh, Deputy General Secretary of VCCI, said that inflation-reducing measures and macroeconomic stabilization policies have born fruit. With the drastic implementation of policies that Resolution 13/NQ-CP proposed, it is strongly believed that short-term business prospects will improve. According to Mr Thanh, at the moment, businesses are mainly concerned about how to put their deposits to good use, as well as how to seize the opportunities should they arise in the near future.

 

According Dr Tran Du Lich, the Government has recently made tremendous efforts in order to stabilize the macroeconomic environment and resolve the inflation, exchange and interest rate dilemma. The rosy prospect, together with the next step of the “resolution package” of Resolution 11 with a middle and long-term orientation, will help improve Vietnam’s macroeconomic environment in 2012 which is witnessing reduced inflation and interest rate and exchange rate stabilization.

At the conference, Mr Pham Linh, Deputy General Director of OCB, also introduced loan packages with favourable interest, along with necessary financial packages for businesses. According to him, the deposit that yields the best capital turnover rate is the capital management package enjoying a discount rate of up to 25 percent. The difference is that OCB focuses on aiding businesses in various states of production and sale, such as buying surplus inventory and collecting accounts receivable, etc., in order to help businesses better manage risks.

 

In order to shoulder challenges together with businesses, Mr Linh revealed that OCB will offer competitive interest rates with different borrowing periods: a 1-1.5 percent per year reduction for loans in VND; 0.5-1 percent per year reduction for loans in dollars; extremely short-term loans (less than three weeks) enjoy a referenced rate of 10 percent; a 1-1.5 percent reduction compared to the usual interest rate for short-term loans targeting import-export businesses or loyalty customers with frequent capital flow through the bank.

 

The availability of cheap and stable capital from OCB is due to the fact that the bank has a good credit relationship with international financial organizations such as International Finance Corporation (IFC)-a subsidiary of World Bank and strategic partners including BNP Paribas and JICA (Japan). IFC and JICA have increased their total amount of loans with favourable and stable interest rates to US$55 million and VND130 billion respectively. Of the US$55 million that IFC loaned out to OCB, US$10 million is used to increase the number of loan contracts in dollars to help small and medium import-export businesses sustain their operations in the midst of a global tightening of credit.

 

With the diversified sources of capital, OCB is active in rolling out measures to help businesses in this difficult time. Previously, on August 28, 2012, OCB, together with the Can Tho Investment-Trade-Tourism Promotion Centre, held a conference titled “Promoting export in the Mekong River Delta” in order to find solutions for businesses encountering issues in exporting their products.

 

Forums to connect banks and businesses continue to be sponsored by OCB, with a forum in Hanoi on September 20 and in Danang on September 27. This is regarded as OCB’s effort to provide cheap capital to small and medium enterprises, and at the same time help businesses have a perspective of the business environment for the last few months of the year so that they can fine-tune their operations to best suit current market conditions.