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Banks to lend companies $17 billion with state subsidy
Banks have committed to lend a combined VND300 trillion (US$17.14 billion) to businesses in the first quarter under a government loan subsidy program, the central bank deputy governor said Thursday.
Nguyen Dong Tien said the interest subsidy policy, which aims to help businesses deal with the economic downturn, would encourage commercial banks to provide VND400 trillion, or nearly $24 billion, in all.
“The banks should facilitate businesses, with a focus on exporters,” Tien said at a meeting held Thursday by the State Bank of Vietnam and the Ministry of Industry and Trade.
The government has decided to use VND17 trillion ($1 billion) from an economic stimulus package to provide an interest subsidy of 4 percent on companies’ borrowings.
Eligible businesses will receive the subsidies on short-term loans made by commercial banks until next December.
Nguyen Ngoc Bao, head of the central bank’s Monetary Policy Department, said the program focused on exporters of 23 key items like seafood, garment, footwear and wood products.
Pham Trung Cang, deputy chairman of Asia Commercial Bank, said his bank has received many loan applications from businesses since the central bank announced guidelines for the program last Wednesday.
It would take the bank a few weeks to evaluate the applications, but borrowers with effective projects would get them early, he said.
The bank would not penalize borrowers who want to borrow afresh to replace existing loans to enjoy the lower interest rates, he said.
Asia Commercial Bank, partly owned by Standard Chartered Plc, plans to lend companies VND35 trillion ($2 billion) under the program. It aims to increase lending by 70 percent this year after growth stagnated in 2008.
The bank now charges interest rates as low as 1.2 percent, the lowest rate in a decade, CEO Ly Xuan Hai said.
Lai Quang Dao, deputy general director of the state-run Vietnam Development Bank, said besides lending at reduced rates his bank has also been instructed by the government to provide credit guarantees on loans taken by businesses.
The bank has earmarked VND26 trillion ($1.5 billion) overall for business loans this year, he said.
Of the commercial banks that have announced credits under the subsidy program, Vietnam Bank for Agriculture and Rural Development – the country’s biggest lender – tops the list with VND165 trillion, its spokesman Phan Thao Ly said Wednesday.
Joint-Stock Commercial Bank for Foreign Trade of Vietnam, the nation’s third-biggest lender by assets, said Wednesday it would try to lend as much as VND70 trillion ($4 billion) under the program.
An Binh Bank, partly owned by Malayan Banking Bhd., has put aside VND3 trillion ($172 million), and Orient Commercial Joint-Stock Bank has earmarked VND2 trillion, according to statements posted on the Ho Chi Minh City-based lenders’ websites, also on Wednesday.
Saigon Thuong Tin Commercial Joint-Stock Bank, or Sacombank, said it has earmarked VND30 trillion for corporate lending.
More needed
Nguyen Chien Thang, chairman of the Handicraft and Wood Industry Association of HCMC, said its members found the government loan subsidy program a good “remedy” for their financial difficulties.
But it is not enough for wood exporters, who are struggling with a decline in new orders, he said.
The government should also provide financial support to help promote Vietnamese products in international markets, he said.
Thang suggested that the subsidy program should target businesses that plan to stock up on raw materials now that their prices are falling.
Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers, said the program would be helpful to businesses but they need more support from the government.
Processors now face a shortage of raw materials as many farmers have stopped raising shrimp and fish after suffering huge losses last year, he said.
So seafood exporters need financial support more to invest in farming activities to ensure supply, he added.
Many exporters said it is important for the government to consider more policies to boost consumption.
Tran Dinh Long, chairman of steelmaker Hoa Phat Group, said his company is eligible for subsidized loans and lower borrowing costs would help reduce prices.
“Low prices would help boost sales, but by how much? Sales do not depend only on prices,” he pointed out.
Huynh Quang Thanh, general director of Hiep Long Wood Processing Company in Binh Duong Province, said a bank rejected his company’s application for a loan to pay salaries.
“Companies can only borrow at subsidized interest rates if they use the loan to pay for raw materials while salaries are the biggest expenses.
“If workers quit, we cannot do anything, with or without the materials.”
Truong Dinh Tuyen, a former trade minister, said the loan subsidy policy by itself can only have a limited effect if it is not accompanied by other policies to revive the market and boost investment.
“Consumption has fallen. A decline in interest rates by 4 percent can only lead to a price cut of less than 4 percent, which would not help improve the competitiveness of local products much.”
ThanhNien, vna
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