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Lending interest rates down, but businesses dare not borrow
The overly high lending interest rates have forced many enterprises to scale down the production, because they cannot arrange enough capital for maintaining production.
Le Duc Tan, Director of the Garment Export Company in district 2, HCM City said that currently, the main source of capital for businesses is the loans from family members, relatives or partners.
“If businesses cannot seek capital from these sources, they will have to either to scale down production or cancel contracts,” Tan said, adding that with such current high lending interest rates, no enterprise dares borrow money from banks.
According to Tan, even when banks slash the lending interest rates by 1% or 2%, enterprises will still keep far away from bank loans. The highest possible profit is 10%, while the lowest lending interest rate (the rate banks offer to the best clients) is 15%, and the average rate is 16-18%.
“With such high lending interest rates, the more money enterprises borrow, the bigger losses they will suffer,” he said.
Tan has not been braving danger by borrowing money from banks, while he has to move heaven and earth to arrange VND500mil to pay for materials and labour cost.
Director of HCM City-based Tan Binh Woodwork Export Company Ha Ngoc Tai said that his company has been the loyal client of Sacombank. However, the company now has to seek capital from other sources rather than Sacombank, because the lending interest rates have become unbearable for the company.
Sacombank has announced to lower the lending interest rate by 1% for all kinds of loans. Other banks, including South Asia, Eximbank and East Asia Banks all have also slashed the interest rates by 1-2%. However, Tai said that he does not intend to access bank loans any more, since the rates after cuts are still overly high for his company.
Tai added that he has no other choice than reduce output.
A client in Singapore ordered 100,000 fine arts products with the company. Tai, after considering that he will have to pay VND30mil more for VND700mil worth of loans after three months, decided to accept the smaller order of 50,000 units. Therefore, the company has to accept the lower unit price, which is equal to 75% of the suggested price applied for the 100,000 unit order.
Nguyen Van Dau, Chairman of Dat Minh Thinh Trade and Production Company, said that production companies can only afford the interest rate of 14% at maximum, while the high interest rates of 17% or 18% should only be applied to service and real estate firms, which can get high profit thanks to the escalating prices.
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