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New loan package to stimulate consumption
Vietnam plans to spend some $700 million on stimulating domestic demand, said a senior trade official.
Vo Van Quyen, deputy general director of the Ministry of Industry and Trade (MoIT)’s Domestic Market Policy Department, said the government has approved a lending interest rate support programme for farmers and entities to buy agricultural machinery, equipment and materials and construction materials used in rural areas.
Under prime ministerial Decision 497/QD-TTg issued late last week, the government will provide interest-free loans for farmers and entities to buy fixed assets for production, such as agricultural machinery and vehicles. The loan period is 24 months. The programme will also offer farmers a 4 per cent interest rate subsidy on loans for a one-year term to buy fertiliser, pesticides and construction materials.
Farmers are not allowed to use these preferential loans to buy consumer goods. “This programme will not cover the poor and industrial zone workers,” said Quyen, explaining they would be taken care of by other social security programmes.
Quyen also said the programme would not give coupons to beneficiaries to buy essential consumer goods, as the MoIT mapped out in its first draft of the programme, because the economic situation in Vietnam is not dire enough to warrant the burden on the state budget. The programme will encourage farmers to use made-in-Vietnam products as part of the effort to fight the economic slowdown while improving investment in the agriculture sector and rural areas.
“We estimate that the programme will be able to create a domestic consumption demand worth up to VND 300 trillion (US$17.5 billion),” said Quyen.
The maximum budget for the programme will be VND12 trillion ($700 million), which will come from the government stimulus package, said Quyen.
At an online Cabinet meeting on March 30, Prime Minister Nguyen Tan Dung said that banks should give farmers preferential or interest-free loans to help them buy machinery, materials, and consumer goods.
Since February, Vietnam has offered enterprises’ a lending rate support programme worth $1 billion to counter the effects of the global recession on the domestic economy.
VietNamNet, VIR
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