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Businesses continue crying over capital   2008-10-13 - DTCK

Banks and businesses still cannot find a common voice. Banks dare not ease loaning conditions for fear of risks, while businesses say that loaning procedures remain too complicated.


Businesses complain


Banks and businesses still cannot find a common voice

Tran Quoc Cham, the director of a newly established industrial equipment company in Hanoi, related that he has contacted several banks to ask for the small loan of VND500mil for the company’s working capital, and he has been refused.


Cham said that the main reason was the overly complicated procedures and requirements set by the banks that the company cannot satisfy.


First, banks ask borrowers to show financial reports. However, newly established enterprises do not have financial reports. Some enterprises have reports, but the reports always show losses for the first several years of operation. In principle, enterprises can mortgage their production equipment and real estate. However, banks nowadays do not accept real estate as a mortgaged asset. As a result, businesses cannot get loans.


As Cham cannot borrow money, he has to cancel his business plans, while depositing the money he has at banks to get interest while waiting for new opportunities to come.


Even Japan-Vietnam Plastics Joint Stock Company, a prestigious company, also complains it can barely borrow money from the bank. The company’s Director Nguyen Xuan Bang said that the bank undervalued the company’s mortgaged assets. One asset has the market value of VND1bil, while the bank said it was valued at VND400mil only. As a result, his company could only borrow a sum of capital just meeting 1/3 of its demand.


Phuong Cong Thang, Managing Director of Hanoi Automobile and Motorbike Corporation, complained that the interest rate remains overly high, at over 20%, which proves to be unaffordable for businesses. “Local newspapers say that interest rates have been going down, but the decreases are slight, which do not help much,” Thang said.


The director of a Bac Ninh-based company said that no business dares think of expanding business scope at this moment. “If you borrow VND30bil now to run a project, you will have pay the interest of VND30bil in five years, as the interest rate now is over 20%,” he said.


According to Cao Sy Kiem, Chairman of the Vietnam Association of Small- and Medium-size Enterprises, interest rates should be lowered to 15% to be affordable for businesses.


And so do banks


The director of a bank said that he has asked bank branches to push up the disbursement to businesses, setting disbursement plans for every branch, some VND200bil for a big branch. However, he has been told that the credit plans prove to be unfeasible.


Businesses, though being thirsty for capital, do not accept loans because they say the interest rates remain very high. Meanwhile, enterprises now hesitate to borrow loans from banks as they do not want to spend time fulfilling the loaning procedures.


A source from the State Bank of Vietnam said that the lending interest rates remain at high levels, 20-20.5% at state-owned banks, and 20.2-20.5% per annum at joint-stock banks.


Banks dare not push up loaning at this moment because they also fear risks. As the US economy has fallen into a recession, Vietnamese exporters will meet a lot of difficulties. Therefore, bankers say that they need to become more cautious with loans.

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