Ho Chi Minh City-based industrial zones (IZs) and Export Processing Zones (EPZs) are a potential market for domestic and foreign banks with lending balance to IZs and EPZs by domestic and foreign banks by the end of March totaling US$16.6 trillion, up 16 per cent and 17.5 times over five years ago.
The southern hub is now home to 14 IZs and EPZs which are running a total 1,031 projects, 807 of which have been put into operation. Their investment capital recorded over US$3.02 billion, including US$1.82 billion by foreign-invested businesses.
According to Tran Ngoc Minh, director of the central bank’s Ho Chi Minh City arm, with the robust development of IZs and EPZs, banking loan demands of entrepreneurs from now until 2010 will expectedly be very big, amounting to some VND16 trillion for production and business activities. Some VND15.5 trillion will also be needed for the construction and expansion of IZs and EPZs.
Banking loans to businesses at IZs and EPZs, hence, are forecast to increase by 30-40 per cent annually in the next five years.
It can be seen that IZs and EPZs with such huge capital demand are unsurprisingly a potential market to domestic and foreign banks.
According to the World Bank (WB), IZs and EPZs are reliable borrowers who face low risks, saying, they have long-term business targets, good facilities, adequate outlets for their products and business experience.
Non-performing loans (NPLs) by IZ and EPZ entrepreneurs makes up only 0.03 per cent of the total lending balance of banks.
“Domestic and foreign banks are entitled to various advantages after the Government recently signed various trade and investment agreements with different countries and territories in the world, creating a legal basis for foreign invested enterprises in Vietnam, boosting trade between Vietnam and other countries and removing various barriers,” said deputy director of the Ho Chi Minh City branch of the State Bank of Vietnam Vo Huy Toan.
“Additionally, many comprehensive reforms of the SBV are underway, which are designed to encourage banks to boost loans to IZ and EPZ enterprises. Under these reforms, banks are required to scale up their capital and promote management capacity, apply advanced technologies and prepare human resources in order to meet requirements amidst tough competition and international integration,” added Toan.
Currently, 52 banks are injecting their loans into IZs and EPZs including 21 foreign and joint venture banks whose lending balance accounted for 55.2 per cent of the total.
To date, banks, domestic and foreign alike, have opened 13 branches, transaction departments and savings funds in seven IZs and EPZs.
VNS, Liberated Saigon
Vietnamese
