Small and medium-sized firms are facing difficulties accessing bank loans to boost production.
Firms face difficulties accessing bank loans
Nguyen Tri Hieu, an independent director on the board of Ocean Bank, said small and medium-size firms face difficulties because they lack sufficient collateral or reliable financial reports.
Even though small and medium-size firms account for 90 percent of Vietnam's companies and play an important role in local economies, they account for only a quarter of total lending.
"Even if banks want to help, they can't ignore risk management and expose themselves to potential bad debt," Hieu said.
The National Financial Supervision Commission said that, as of October, the number of newly-registered firms was 77,542 with VND486.1 trillion of register capital, up 29.2 percent and 37.9 percent respectively on a year earlier.
As of September, credit growth was 10.5 percent on a year earlier, when it recorded 7.26 percent. At the prevailing rate, the year's credit growth target of 17 percent set by the State Bank of Vietnam will be reached soon. But big firms were getting most of the lending.
Another worry for companies is lending interest rates.
Vo Truong Thanh, chairman of Truong Thanh Corporation, worries that lending rates will increase as several banks had started to raise their deposit interest rates.
"The lending rates in Vietnam are higher than neighbouring countries so local firms will be more disadvantaged," he said.
The National Financial Supervision Commission reported that low inflation should keep lending rates stable for the rest of the year.