20 per cent of Vietnam SMEs Facing Bankruptcy Need Supportive Hands from Banks

Up to 20 per cent of Vietnam's small and medium enterprises reportedly confronting bankruptcy threats need supportive hands from local banks now in the face of the global financial crisis, the Vietnam Association for Small and Medium Enterprises said.

 

The association highlighted that 60 per cent of SMEs are having difficulties because they mainly borrow bank loans which account for 60 per cent-70 per cent of their investments.

 

To help SMEs, a number of banks have joined efforts to increase liquidity for them. The Mekong Delta Housing Development Bank (MHB)'s Saigon arm said it cut 1 per cent to 2 per cent of loans for local companies, particularly exporters. MHB also increased liquidity to SMEs by raising lending to 85 per cent of house mortgage-based value from current 70 per cent.

 

Agribank, the country's biggest state-owned bank by assets, with 2,200 branches across Vietnam cut lending rates to 15 per cent per annum for SMEs, particularly lowering borrowing costs to 14 per cent per annum for agro, forestry, fisheries households.

 

Currently, loans for SMEs by Agribank have accounted 93 per cent of its total outstanding loans.

 

Vietnam has nearly 350,000 SMEs, representing more than 95 per cent of the total number of enterprises with registered capital of VND1.4 trillion.

 

Morgan Stanley recently said Vietnam’s economy is still on the right track after its central bank had cut benchmark rates and lowered compulsory bank reserves by 1 per cent for dong deposits. (Securities Investment, VNA)