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SMEs, workers lose out without access to loan subsidies
Most small and medium sized enterprises (SMEs) have not been able to avail of the government’s 4 percent interest rate subsidy on loans despite being the target beneficiaries of the scheme.
The main reason given by banks for rejecting loan applications of many SMEs is that they have no assets to submit as collateral, a conference in Hanoi heard last week.
The deputy chairman of a Hanoi-based foodstuff firm, who asked not to be named, said his company had to borrow money from other firms that could get loans from the government’s subsidy program.
He said banks refused to lend money to his company because it did not have valuable land for collateral.
“We have shown certificates stating the company’s machines and other assets worth a total of more than VND10 billion (US$562,000) to many banks. But all of them have refused to lend,” the deputy chairman said at the conference on “The effectiveness of the government’s stimulus packages.”
He said some lenders agreed to loan just VND500 million ($28,000) at the maximum.
The capital shortage had forced the company to reduce production, and 150 out of 200 workers lost their jobs.
The entrepreneur said he was hesitant about maintaining the company. He noted that his wife had made a large profit from selling a property she had bought early this year.
“I am considering selling the company and becoming an individual investor like my wife,” he said. “Obviously, unlike big companies, my firm cannot get any support from the government.”
Most SMEs are struggling to access the subsidized loans, said Nguyen Duc Thuan, director of the Defense Industrial Material Co. (DIM), under the Ministry of Defense.
Thuan said the government’s subsidy program was designed with “too-strict mechanisms,” which prevented many businesses from benefiting from it.
A company survey of 60 SMEs found 90 percent were not able to get the loan, he said.
“I also work for the Vietnam General Confederation of Labor, so I know that hundreds of SMEs have been bankrupt since the subsidy program was launched, causing millions of workers to become jobless. And none of them were eligible for the subsidized loan,” Thuan said.
On the other hand, many companies enjoyed good earnings from the loans, he said, adding most of them were state-owned firms.
“Most military-run firms used the effectively, so they posted healthy results in the first half,” he said. The DIM’s survey also showed 87 percent of the borrowers had used the loan to maintain and expand their business.
Cao Thi Thuy Nga, Deputy General Director of the Military Commercial Joint Stock Bank, said the bank has lent subsidized loans worth VND10.6 trillion ($596 million). Nga also said many lenders had made a profit from the subsidy program.
The central bank has said loans under the program totaled VND385.58 trillion ($21.7 billion) as of July 23, up 2.08 percent from a week earlier and around 315 percent from February when it began implementation.
The conference, attended by hundreds of local business representatives, was organized by the Vietnam Businessmen’s Association last Friday.
thanhnien, sgtt
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