Export credit packages: motivation for businesses in difficult times

Import and export credit is being deployed by many banks. Photo: ST

Long-term capital needed

According to the State Bank (SBV), it is estimated that as of December 21, 2020, credit increased by 10.14% compared to the end of 2019 and by 11.62% over the same period in 2019.

Credit growth in the economic sector, capital sources continued to focus on priority areas under the direction of the Government, especially some areas that are now taking advantage of the new context as export credit has increased by about 8%.

In 2021, the banking industry set a credit growth target of about 12% and will be adjusted to suit the actual situation. Reasonable credit growth is associated with improving credit quality, focusing on production areas and priority areas.

For exporting enterprises in 2020, the obvious difficulty is the shortage of supplies and source of goods as well as being affected by trade interruptions, a series of flights canceled, and immigration restrictions

For example, in the leather and footwear industry, it is estimated that for the whole of 2020, exports of leather and footwear could decrease by 10% compared to 2019, reaching about US$20 billion.

Ms. Tran Thi Huong, Deputy General Director of Gia Dinh Group Joint Stock Company, said in 2020, due to the influence of Covid-19, orders decreased by 20-30%.

Currently, although the business has enough orders until February 2021, the payment time for orders has doubled compared to before by up to 180 days, so the business needs financial resources to stabilize production.

Therefore, along with export subsidies, export credit is also one of the support measures to facilitate domestic goods and services to export to foreign markets.

The Government has issued Decree No. 75/2011 / ND-CP dated August 30, 2011, on the State's investment credit and export credit, and the Ministry of Finance has issued a circular guiding this Decree.

Accordingly, businesses that meet the requirements of the Decree will be allowed to borrow a maximum amount of 85% of the value of the signed export or import contract or the L/C value of the loan before delivery or the valid bill of exchange for loans after delivery. At the same time, the maximum loan amount applicable to each foreign exporter and importer must not exceed 15% of the actual charter capital of the Vietnam Development Bank. The loan term does not exceed 12 months.

The "ticket" promotes exports

In order to achieve the double goal that both supports businesses and promotes credit growth, commercial banks are promoting export credit.

Mr. Pham Toan Vuong, Deputy General Director of Bank for Agriculture and Rural Development (Agribank), said that more priority is given to chain lending and export lending, so banks are more willing to approach and lower interest rates compared to regulations of the State Bank.

Specifically, Agribank has recently issued credit packages to support customers to recover and develop production and business. In particular, for customers who are FDI enterprises, the size of the preferential credit package is VND5,000 billion and US$150 million.

For loans in VND, the maximum loan period is six months from the disbursement date for each debt receipt arising from now to June 30, 2021; the maximum interest rate is 4.8% / year (for loans for export) and 6.5% (for loans for import or domestic production and business).

In 2020, many credit packages for export have been launched.

In July 2020, Saigon - Hanoi Commercial Joint Stock Bank (SHB) launched the pre-delivery Export Finance product. Accordingly, SHB will finance working capital for customers to purchase raw materials, pay production costs, process and trade export orders with a sponsorship rate up to 90% of demand of capital and loan term up to 12 months.

At VietCapital Bank, this bank has set aside a loan package with interest rates of only 7.5% / year and received a discount of international money transfer fees up to 50% for import-export enterprises.

An Binh Commercial Joint Stock Bank - ABBank also has a pre-shipment export sponsorship program development. This is a form of financing working capital for exporting enterprises to carry out production and trading plans for export goods, with the main source of loan repayment being the revenue from export activities of the enterprise.

Thanks to these incentives, many banks said that outstanding loans for businesses operating in the import-export sector accounted for about 30-45% of the bank's total loans. Of which, the majority of export loans are foreign currency loans with USD interest rates fluctuating around 3% / year, mostly short-term loans for businesses to find working capital sources for production and business.

According to Ms. Tran Hai Yen, Director of Bnew Trade, Services and Import-Export Co., banks not only provide preferential credit but also provide trade finance tools, import and export guarantees. Thereby helping businesses to both have capital to overcome difficulties; to have more "tickets" to enter new markets and to transact with partners faster.