|
Businesses avoiding bank loans due to high interest rates
Six commercial banks have announced lower lending interest rates, but enterprises still complain that they cannot afford the rates.
Lending interest rates have increased by 70% over the beginning of the year, and the high interest rates have been keeping enterprises away from banks.
Nguyen Van Dao, General Director of Tien Giang-based Godaco Company, said that he had to borrow only 50% of the sum he intended due to the overly high interest rate of 1.75% per month. Previously, the company borrowed money from banks to pay farmers for seafood materials. Now, it is not borrowing more money and is delaying paying farmers, though it well knows that this will cause difficulties for farmers.
According to General Director of Savimex Nguyen Hoang Vu, Savimex now requires partner companies to pay 30% of orders’ values right at delivery. Vu said that it is now the high season of making products for export, but the company only accepts short-term contracts because it wants to take initiative in capital arrangement.
Nguyen Anh Tuan, Deputy General Director of Thuan Phat Seafood in HCM City, said that interest rates once soared by 7-9% per annum, but have decreased by 1-2% only.
As lending interest rates remain overly high, enterprises have to choose either to cut production or raise sales prices. In fact, no type of business can bring profit as high as 20%. Therefore, enterprises have no other choice than cutting back on loans.
Nguyen Thi Le, the director of a company specialising in plastics products, said that in 2007, interest rates were 10-11% per annum, while the rates are double that now. Le said that a lot of orders have come, but she has had to refuse a lot of them because of no capital.
Deputy General Director of Asia Commercial Bank Do Minh Toan admitted that the growth rate of new clients has decreased by 30-40% over the same period of last year, and that credit in Q2 saw no increase over Q1. Enterprises dare not borrow money because of overly high interest rates, while input material prices and labourers’ salaries have been escalating.
As banks can only mobilise short-term capital, they only provide short-term loans (less than three months), while prioritising companies that make products for export and key consumer products.
The chairman of a joint-stock bank said that banks now have capital in excess, partially because clients have paid money back to banks as their business cannot bring profit high enough to cover the interest rates. The chairman said that banks will have to make every effort to find outlets for their capital.
When asked about the possibility of cutting lending interest rates, bankers say that rates will not be cut in the immediate time, as they had to mobilise capital at high costs before.
According to the State Bank of Vietnam, in July 2008, outstanding loans increased by only 0.7% over June (loans in VND rose by 0.59% while loans in foreign currencies by 1.07%). Compared to the end of 2007, outstanding loans increased by 18.36%, of which January alone saw the increase of 6.3%. July had the lowest increase of 0.7%.
VNN
|
