Urgently removing difficulties in capital to support exports

Mr. Nguyen Ngoc Nam, President of VFA spoke at the conference. Photo: N.H

Lack of capital for rice and seafood procurement

Mr. Nguyen Ngoc Nam, Chairman of the Vietnam Food Association (VFA), said that credit capital was currently the most concerning issue for rice exporters in the Mekong Delta. Almost all traders were facing many difficulties in accessing credit capital, especially working capital.

Meanwhile, the rice trade market has been volatile in recent years, even the domestic supply has been unbalanced during some periods. Therefore, a low credit limit impacts the traders' purchasing progress significantly.

According to Mr. Nguyen Ngoc Nam, at the time of the main harvest season (February, March, April, July, August and October every year), rice procurement faced many difficulties because banks could not actively open credit limits further (in certain periods) for rice exporters. In addition, with the use of large financial leverage, maintaining the circulating reserve level of 5% according to the provisions of Decree 107/2018/ND-CP put a lot of pressure on rice exporters.

Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), also mentioned that currently, seafood export orders and prices were falling sharply. Enterprises faced the risk of losing customers, increasing inventory, causing cash flow to be limited and interrupted, putting pressure on maintaining the purchase of raw materials from people and paying due loans of banks.

In addition, from the third quarter of February, many banks announced and applied to increase the USD loan interest rate from 2.1-2.8% to 3-3.3% and even to 4.5%, while seafood enterprises mainly borrowed US dollars. Currently, USD borrowing interest rates were at a high level of 4.2-4.9% in the context of the decline in production and export.

Mr. Nguyen Hoai Nam was also concerned about credit tightening, limiting lending below the granted credit limit, new loans were only disbursed in proportion to the old loan when the previous debt has to be repaid. This made it difficult for enterprises when financial costs were high, not to be proactive in purchasing raw materials from farmers and fishermen in the current period.

Many proposals to remove difficulties in capital

In the face of the above difficult situation, Mr. Nguyen Ngoc Nam suggested that the Government and the State Bank should have preferential mechanisms and specific policies to support capital for rice exporters in order to create favorable conditions for them to have more financial resources to purchase temporary storage, contribute to stabilizing the output price of rice for farmers during the main harvest season, and contribute to increasing business efficiency for the business community.

Specifically, it was necessary to strengthen short-term capital at the time of the main harvest season and continue to guide traders to access capital at low-interest rates more effectively to support traders to purchase for temporary storage and stable production. In addition, strengthen collateral-free lending policies.

This policy could only be applied during peak harvest periods and must be based on the results of the assessment of the capacity and business history of each business to have suitable funding programs.

Banks also should have a plan to stabilize interest rates in certain terms or have separate regulatory policies for businesses in the agricultural sector in general and rice businesses in particular to support businesses. maintain stable and sustainable production and business activities.

As for the seafood sector, Mr. Nguyen Hoai Nam suggested the banking industry reduced the US dollar loan interest rate to below 4% to support export companies.

Mr. Tran Nhu Tung, Vice Chairman of the Vietnam Textile and Apparel Association, also proposed the Government a preferential interest rate package of 0% to pay employees' salaries, similar to the loan package that the Bank for Social Policies implemented in the Covid-19 period. This policy would contribute to helping businesses reduce financial pressure to pay wages to employees in order to retain employees during the current difficult period.

Mr. Tung also proposed the State Bank to study and propose to change the conditions for accessing the 2% interest rate compensation package and direct commercial banks to expeditiously lend loans to businesses with the support of the corporate guarantee fund, so that commercial banks could lend more confidently.

Sharing with businesses, Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Ho Chi Minh City Branch, said that in the first quarter of 2023, the State Bank of Vietnam issued two huge policies that have a direct impact on supporting businesses. Firstly, in the first quarter of 2023, the State Bank of Vietnam had adjusted to reduce the interest rate twice, especially the recent adjustment to reduce the ceiling interest rate for deposits from 6 months or less to 5.5%, demand deposits from 1% to 0.5%, thereby directly affecting deposit interest rates, as a basis for reducing lending rates.

The second was the issuance of a policy on structuring the debt term, keeping the debt groups for customers. This mechanism would help businesses reduce debt repayment pressure as well as create capital conditions for businesses to maintain stability and overcome difficulties.

Mr. Nguyen Duc Lenh also said that since 2012, the export sector belonged to the group of short-term loans in VND with low-interest rates of only 4.5%. In addition, export or processing and manufacturing companies were also in the group entitled to the Government's 2% interest rate support package. Although the disbursement of this package was still slow, the reason was that this was a support policy by the Government's budget and implemented through commercial banks. Therefore, the need to ensure loan conditions and cautious psychology in using budget capital were also influencing factors.

On the issue of credit limits, Mr. Lenh informed that in 2023, the State Bank of Vietnam oriented credit growth of 14-15%. Therefore, this year the capital would not be entangled by the credit limit.

However, Mr. Lenh said that the recommendations and proposals of businesses and associations would be recorded and reported to the State Bank for research and appropriate adjustments.