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Vietnam firms still have to borrow bank loans at 20pct p.a.
Local producers still have to borrow bank loans at interest rates of up to 20 percent per annum though the State Bank of Vietnam (SBV) announced to cap lending interest rates at 15 percent p.a., the local newspaper Nguoi Lao Dong (“Labourer”) reported.
Director of an unnamed small company in HCM City said that his firm currently has to borrow long-term funds at an interest rate of 20.5 percent p.a. although the firm has good creditworthiness.
“Our company dare not borrow short-term working capital loans due to high rates. A few days ago, the bank announced to trim down interest rates for our long-term borrowings to 17.5 percent p.a. We should have enjoyed lower rates”, the source said.
Not all small and medium enterprises (SMEs) can gain access to cheaper bank loans, depending on their credit scores, said a credit officer of Nam A Commercial Joint-Stock Bank (NamABank), adding that average lending rate for SMEs is about 20 percent p.a. (19 percent p.a. as the lowest).
Earlier, the central bank capped short-term lending interest rates at 15 percent per annum for four sectors, including agriculture, exports, small and medium enterprises (SMEs) and supporting industries from May 8. However, local businesses still face high borrowing costs as banks tighten their lending conditions.
Capping lending rates at 15 percent is a positive move of the central bank; said Cao Sy Kiem, member of the National Advisory Council for Financial and Monetary Policies, yet emphasising that a lot of businesses cannot enjoy lower funding costs due to surplus demand.
Statistics showed that only about 40 percent or 250,000 enterprises could borrow funds at 17 percent per annum in the past time as capital demand far exceeded supply, Kiem said.
Besides, domestic lenders are cautiously lending out for fear of bad debts increase; instead, they use idle cash to purchase government debt, considering it as a safer investment, experts commented.
According to a recent survey, lending to production, consumption and home purchase is charged interest rates of around 18-21 percent p.a.
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