Chairman of the Vietnam Chamber of Commerce and Industry Vu Tien Loc has proposed that the state bank should lower lending rates while inflation is still low to help local businesses.
State Bank vice head Nguyen Thi Hong and
Chairman of the Vietnam Chamber of Commerce and Industry Vu Tien Loc
According to Loc, the current inflation rate of less than 1%, coupled with indicators that imply annual inflation of 2% by the end of the year provide an ideal environment for lower interest rates. Annual lending rates currently range from 6% to 7% for short-term loans and 9% to 10% for longer term borrowing.
He went on to say that many commercial banks had no room for credit growth so the State Bank of Vietnam should extend the quotas banks had been allocated to raise their credit to help both firms and banks. He urged banks to speed up restructuring and improve transparency.
Loc also pointed out that firms were taking ridiculous risk with in some cases 90% of the their investments reliant on bank loans, which was unsustainable.
State Bank vice head Nguyen Thi Hong, said this year’s credit growth target had been set at 15% and the country had already recorded 9.54% expansion in credit in the first 8 months. Depending on the situation, the SBV may revise the target to 17%.
Vo Tri Thanh, vice head of the Central Institute for Economic Management, claimed it would be difficult to lower lending rates as the rates also depended on government bonds, deposit rates and forex rates. "It would be impossible to lower lending rates in the next six months," he argued.
