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Credit at many banks has recently increased due to the promotion of customer support programs. Photo: Enterprise provided

Thirst for capital

As noted, as soon as the Government issued Resolution 128/NQ-CP dated October 11, 2021 on temporary guidance for the "Safe and flexibile adaptation, effective control of the Covid-19 pandemic", allowing localities to determinate the pandemic level and ease many business activities has made enterprises excited with plans to return to production and business.

According to BSC Securities Company, more enterprises are reopening, which will increase the demand for working capital to serve year-end orders in many industries.

Currently, small and medium enterprises, retail companies attract about 70-80% of credit from banks. Although the loan demand of this group has decreased recently due to the impact of the Covid-19 pandemic, it is still the driving force for credit institutions to deploy preferential lending products for interest rates in the last months of the year.

According to the State Bank of Vietnam (SBV), as of October 7, 2021, credit of the whole system increased by 7.42% compared to the end of 2020, significantly higher than the increase of 5.48% in the same period in 2020.

According to experts, the Covid-19 pandemic is gradually being controlled, with the plan to reopen the economy and the commitment of banks to continue promoting interest rate support packages, along with peak production and business at the end of the year, so enterprises will increase credit demand and seek more borrowing activities.

Talking about this issue, a representative of a mechanical manufacturing enterprise in Hanoi said that the pandemic and social distancing regulations had caused revenue to decrease by 70%, the working capital flow had also been exhausted. Right after reopening, it had production orders and needed capital to buy input materials as well as pay salaries for workers.

Sharing the same view, a representative of TLT Import-Export and Trading Co., Ltd. said that enterprises in the field of commerce and services needed capital, so it was necessary to create conditions for them to access and borrow loans at low interest rates.

However, accessing credit is always a problem for enterprises.

Mr. Tran Viet Anh, General Director of Nam Thai Son Import-Export Joint Stock Company, Vice Chairman of Ho Chi Minh City Business Association, said that enterprises that were carrying out production in the ‘three on the spot’ model needed preferential loans to pay salaries and employee support.

However, in order to get a bank loan, enterprises had to wait too long due to complicated documents and procedures. Even after a long time of waiting, they could not get a loan. In addition, Mr. Viet Anh suggested that when considering lending to enterprises, banks should not consider old debts being postponed or rescheduled as bad debts.

Also on this issue, the leader of a company involved in furniture production said that the company needed capital to produce the year-end products, but with the preferential loan package, the bank set too many conditions such as requirements for demonstrating cash flow, feasible business plan.

Moreover, the initial preferential interest rate might be down to 6% per year, but only applied in the first six months, after that it would be adjusted based on the reference interest rate and a margin of 3% per year and periodical adjustment of three months. It meant that enterprises would have to borrow up to more than 9% per year.

Removing problems

According to the SBV, the deposit and lending interest rates at the end of August 2021 continued to decrease compared to December 2020. Moreover, the banks speeding up the support for enterprises was forecasted to make credit increase.

Currently, 16 banks have agreed to reduce lending interest rates with the total interest reduction for customers estimated at more than VND20,600 billion from July 15, 2021 to the end of 2021. As of the end of September, the group of 16 commercial banks accounting for 75% of the total outstanding loans of the economy reduced lending interest rates by more than VND11,800 billion, reaching 57.3% of the commitment.

Faced with the above-mentioned difficulties, the enterprises recommended that it was necessary to quickly have solutions to support enterprises with enough capital to overcome difficulties, loosen conditions for enterprises be supported with money through credit packages, not only for the year-end period, but also for the long-term business plan in 2022 and the following years.

Mr. Nguyen Tuan Anh, Director of the Credit Department for Economic Sectors, said that, in addition to a series of debt rescheduling and interest support policies that banks were implementing, the SBV was considering an interest rate compensation package of VND3,000 billion, equivalent to a loan balance of more than VND100,000 billion (interest rate of 3-4% per year) to support people and enterprises in the future.

At the meeting between the Prime Minister and enterprises on October 12, Governor Nguyen Thi Hong affirmed that in the future, the banking system would continue to implement solutions to remove difficulties for enterprises and people, but ensure the safety of the system and maintain macroeconomic stability.

Therefore, the Governor asked enterprises to share with the banking system in this process. In addition, Deputy Minister of Finance Tran Xuan Ha said that fiscal and monetary policies would be coordinated to ensure cash flow of enterprises is not interrupted. The Ministry of Finance would also work with the SBV to study and report to the Prime Minister to consider the interest rate mechanism for enterprises.