Many banks have refused to lend money to fish processing companies in the Mekong Delta regions due to their ineffective management.
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For many years, credit institutions in the Mekong Delta invested mostly in rice and aqua-products, which make huge profits through exports. However, the State Bank of Vietnam's Credit Department director, Nguyen Viet Manh, said the loans for aqua-products have sharply decreased and bad debt are rising, forcing banks to extend their debt payments.
In the first nine months of the year, outstanding loans for rice processing increased by 27.35% compared to the end of 2012, while the figure for fish processing is only 3.77%.
Even loans for Tra fish, one of the key products from the Mekong Delta, only increased by 1.74%. Only shrimps are able to retain some of the attention when its outstanding loans increased by 31.19%.
Banks have recently shown reluctance to invest in the fish processing industry because the market is in recession. In addition, several bankruptcy cases filed by fish processing companies, such as Bianfisco, Phuong Nam and Song Hau, have made banks think twice.
According to a representative of BIDV, banks are able to give loans at low interest and companies are in need of capital, but successful transactions are few due to lack of trust. "If they would do a better job of managing their funds, without making investments in the real estate, then their situations might not be so bad." he said.
In order to solve this problem, said the representative of BIDV, banks should continue to give preferential loans to processing industry for export and leave it to the SBV to handle the bad debt in the sector.
Moreover, banks have complained about low value collateral and asked the SBV to create a special mechanism for such cases. Meanwhile, the government must carry out inspections to classify credible and profitable firms and lift the loan limit, they commented.
