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Guarantee mechanism put difficulties on businesses
The government has released a credit guarantee decision in an effort to help businesses more easily access bank loans. However, experts say that the overly strict requirements of the credit guarantee mechanism will make many enterprises unable to access loans.
“The government’s policy on providing credit guarantees, through the Vietnam Development Bank (VDB), to help small- and medium-size enterprises (SMEs) get loans to expand production and struggle against the economic difficulties proves to be a necessary move at this moment. However, the implementation of the policy remains problematic,” said Nguyen Thanh Son, Deputy Chairman of SCM Finance Company.
The biggest problem, according to Son, is that VDB does not provide guarantee services for real estate development.
“The development of the real estate market will help lead to the development of many other industries and business fields, especially the production of construction materials (cement, bricks and steel). If Vietnam does not support the real estate market’s development, the credit guarantee programme will be less effective,” he added.
Son went on to say that investors have injected money in a series of construction material workshops, hoping that the real estate market will recover soon. If real estate development is not supported by the state, construction material production will not be able to develop, as products will have no outlets.
Under the guarantee mechanism, VDB will only provide guarantees to enterprises which have chartered capital of under VND20bil ($1.1mil) and fewer than 500 workers.
According to Nguyen Phuong Dung, Director of Thanh Phuong Joint Stock Company, it is necessary to loosen the requirements so that more businesses can get guarantees from VDB.
Sharing the same view, the Vietnam SMEs Association said that with the current requirements, garment, footwear and handicraft companies would not be able to get a guarantee because they always employ more than 500 workers.
A representative of Ha Thanh Construction Company said that as only businesses which have financial difficulties need guarantees from VDB, in order to effectively support businesses in difficulties, it is necessary to loosen the requirements.
One of the six requirements for getting a credit guarantee is that enterprises do not have overdue debts. The regulation, according to Ha Thanh Company, closes the door to the guarantee service on construction companies, since most of the companies in the field have overdue debts.
Meanwhile, commercial banks also complain about the mechanism to provide guarantee for credits. Under the current regulations, VDB will make decisions about whether it will provide guarantee service within 60 days after it receives applications for credit guarantees.
Pham Xuan Hoe, representing Vietinbank, said that if it takes 60 days to get a response on a decision about the guarantee service from VDB, commercial banks will not be interested in giving loans.
VietNamNet/DTCK
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