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Vietnam says small, medium-sized companies are not ‘collapsing’
Vietnam’s small- and medium-sized companies are not “collapsing” even as the central bank increases borrowing costs to cool inflation, the government said.
These companies are “relatively” stable and growing and are not failing as suggested by some recent “unofficial” sources of information, according to a statement posted on the government’s website Monday. The statement didn’t elaborate.
The Vietnamese central bank has raised its benchmark interest rate three times this year to the highest level in Asia to slow the fastest inflation in at least 16 years. The State Bank of Vietnam (SBV) has also capped 2008 credit growth at 30 percent and given lending preferences to companies that export and produce essential products for the economy.
President of the Vietnam Association for Small and Medium-Sized Enterprises, Cao Sy Kiem, a former central bank governor, said about 20 percent of the nation’s smaller companies have gone bankrupt this year as the economy falters, Thoi Bao Kinh Te Viet Nam reported September 15.
An increase in bankruptcies is likely if the government doesn’t lower the prime interest rate, currently 14 percent, analysts warned.
About half of Vietnam’s 350,000 small- and medium-sized enterprises (SME) still have access to bank credit, according to a statement seen on the central bank’s website Monday.
A Dow Jones newswire report Tuesday quoted SBV’s credit department director Ta Quang Khanh as saying outstanding loans to small-and medium-sized businesses totaled VND299.5 trillion (US$18 billion) at the end of July, an increase of 16.7 percent from the end of last year.
Khanh said SMEs received “adequate support” from both local and foreign banks operating in the country. He played down any “case for a massive failure” of local SMEs “under any circumstance.”
In fact, SMEs did not have difficulty getting loans thanks to their “active and flexible” business, he said.
Total outstanding bank loans to small- and medium-sized companies account for 27.3 percent of the country’s total loans, according to the central bank credit department’s figures.
About 3.6 percent of the outstanding loans to SMEs are classified as bad loans, up 1 percentage point from a year earlier.
The central bank surveyed 163,673 SMEs, about half of the country’s total, and found 23 percent are profitable, 73.2 percent are breaking even, and 3.8 percent are losing money, the department said.
Thanhnien
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