Financial leasing significant to mobilise capital

BSL is a joint venture between the BIDV and Sumitomoto Mitsui Trust Bank. (Photo: bslease.com.vn)

Financial leasing is an alternative way of financing whereby a licensed leasing firm purchases an asset on behalf of its customer in return for an agreed series of payments, which usually include interest.

This kind of credit has become popular globally, with total revenue of up to US$1 trillion per year. In Japan, the annual figure is some US$50 billion.

However, revenue from financial leasing in Vietnam was just VND8.6 trillion (US$369.8 million) by the end of the second quarter in 2018.

According to Can Van Luc, Chief Economist of the Joint Stock Bank for Investment and Development of Vietnam (BIDV), there will be huge demand for machines, equipment and vehicles in the next two years as stable growth has been forecast for the Vietnamese economy, with GDP growth expected to exceed 6.5% during the period.

With banks limiting short-term capital for medium- and long-term loans, and small and medium enterprises short of mortgageable assets, financial leasing is an important solution helping local firms overcome capital barriers, Luc said.

BSL general director Nguyen Thieu Son said financial leasing mobilises resources for sustainable development. It also settles problems of money balance, capital restructuring and effective use of capital.

Vietnam’s financial and banking sector has been developing rapidly, with 91 commercial banks, 27 financial and financial leasing firms and 1,100 credit institutions. Financial leasing has grown in stature as a channel to inject capital for local companies.

Fujita Takeshi, BSL deputy general director, gave a bright outlook for the Vietnamese financial leasing market, due to expected overall economic growth.

The BLS has designed financial leasing models to serve demands of companies, contributing to the development of businesses and the financial market, he added.

It is a joint venture between the BIDV and Sumitomoto Mitsui Trust Bank, the first financial leasing joint venture between a Vietnamese bank and a foreign financial institution in Vietnam.

With a chartered capital of VND900 billion (US$38.7 million), the venture is expected to attract more than 3,200 Japanese firms operating in Vietnam that have been using financial leasing services and other locally-based firms.