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Now private businesses can borrow ODA capital, but. . .
The Government decision to allow private businesses access to ODA capital (Official development assistance) is called a breakthrough in using the important capital source for investment and development.
Private businesses eager
For the last ten years, accessing ODA capital has been the privilege of state- owned enterprises. Now, private businesses can access ODA capital as well, a move termed as a breakthrough in using a capital source that all businesses desire. ODA capital offers long-term loans and preferential interest rates.
According to Nguyen Manh Hung, Director of Thai Ha Books, most private businesses are eager for ODA capital, and now that not only state-owned enterprises have this advantage, all businesses can use the capital in an effective way.
Hung explained that, although private enterprises have small capital, they are dynamic and their effective operations allow them to grab business opportunities. Private businesses also have many talented staff, so much so that state-owned enterprises now complain about a ‘brain drain’.
“Unlike state-owned enterprises, with a lot of divisions and boards, private businesses have neatly organized management boards that must take responsibility for the existence of the enterprises,” Hung noted. “Therefore, private businesses must think carefully about how to use capital most effectively, and they dare not waste a single dong.”
Meanwhile, a director of a construction company (Who prefers to remain anonymous) commented that past prevention of access to ODA loans for private businesses was unfair and should be halted. State-owned enterprises may not use up all the capital with preferential interest rates, while private businesses are always thirsty for capital and sometimes must borrow on the black market and pay high interest rates.
Sharing this view is Phan Duc Tien, Director of Phan Tien Enterprise in Hanoi.
He states that the lack of capital is always the biggest problem of businesses. “In 2008, we once had to borrow capital from banks at the sky-high interest rate of 20 percent,” Tien complained. “We were so jealous of state-owned enterprises that could borrow ODA capital at 1 or 2 percent only.”
“If we can also borrow capital from ODA, this will be a driving force to allow us to do better business,” he added.
Easier said than done
According to Dr. Nguyen Quang A, the ODA disbursement rate in the last years has been low, sometimes just 50 percent. He called this a big waste because the huge capital could not be disbursed when Vietnam, a developing country, needs so much.
A maintained that, in other countries, a model of cooperation exists between the state and the private sector, letting private enterprises use development assistance in the most effective way. In Vietnam, due to lack of confidence in the private sector, those businesses were blocked from using that kind of capital.
Now the situation is different. Dr. Le Dang Doanh, a renowned economist, responded: “better late than never.” Doanh does warn that it is easier said than done and that private businesses face a long road ahead to accessing ODA capital.
“ODA capital is limited, while businesses are mushrooming,” he explained. “Many businesses cannot borrow capital from banks at high interest rates, let alone ODA capital with preferential interest rates.”
Doanh said that ODA information needs to made public, so that all potential borrowers can have a chance to access the loans. The Ministry of Planning and Investment should set up a unit in charge of attracting ODA capital for the non-state economic sector’s investment projects. The unit would also be in charge of assessing businesses’ enterprises, introducing projects, seeking capital and joining forces with businesses in the process of negotiation.
Dr. Le Tham Duong from HCM City Banking Institute noted that there is one big problem that may keep private businesses far from ODA capital: The lack of transparency in financial management.
“A lot of private enterprises have not followed the financial exposure plan as required. The finance reports sent to government agencies always lack information with inaccurate figures,” he observed.
VietNamNet, DTCK
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