Supporting SME to have better access to capital
Updated at Sunday, 08 Oct 2017, 08:00
The Hanoitimes - The relationship between banks and enterprises, especially medium and small enterprises (SMEs) has been improved and more open. However, difficulties in accessing banks’ capital remain challenges for enterprises, which requires a better connection between the two sides.
According to statistics, the number of SMEs are 97% of the total enterprises, but contributes to 45% of GDP, 31% to the state budget and created 5 million jobs. In reality, in addition to the available capital, while the stock market is in the process of developing, Vietnamese’ SMEs are mainly based on banks’ capital for development.
Specifically, under the instruction No. 26/CT-TTg dated June 06 of the Prime Minister, with the spirit of government accompanying enterprises, and based on the current situation of the currency market and macro-economy, since July, the State bank of Vietnam (SBV) has reduced the interest rate for SMEs by 0.5%, from 7% per year to 6.5% per year. Besides, series of events connecting banking – enterprises at provinces are implemented with the committed disbursement fund of hundreds of trillion VND in 2017.
Dr. Can Van Luc said, interest rate in recent times has significantly reduced and at a low rate compared to the region and the real inflation rate. According to the statistics of SBV, at present, there are more than 200,000 SMEs lending capital from credit institutions.
Credit growth for SMEs has been steadily growing in recent years. As of August 31, the credit balance for SMEs reached nearly 52.8 billion USD, up 7.49% compared to the same period of last year, and higher than the growth rate of the same period of 2016, which is 21.14% of total credit balance of the economy.
Despite the credit relationship between bank and enterprises, especially with SMEs have been improved and more open. However, many enterprises still have difficulties accessing banks’ capital. Dr. Can Van Luc said it is due to the following reasons: the majority of SMEs are in small scale, with limited financial capabilities, lack of assets for guarantee or assets with low value, lack of transparency with regard to asset ownership, lack of long term strategy and feasible business plan. As such, banks are concerned over giving out loan to enterprises, due to the lack of information. Banks can only look at the asset for guarantee, but SMEs are lacking the assets as requested by the bank.
Deputy Governor of the SBV Dao Minh Tu said, the SBV is implementing the Resolution No. 19-2017/NQ-CP and Resolution No. 35/NQ-CP, the SBV has developed and issued the program to improve the business environment, improve the national competitiveness in 2017, which focuses on some solution, such as: improving the transparency in credit information; solutions to improve the access to capital for enterprises; simplifying procedure and modernizing administrative procedures to reduce expenses for enterprises and citizens. “In the coming time, SBV will organize mission to check the operation at some banks, with the participation of journalism to ensure the transparency and clarity on the result of administrative reform” – Mr. Dao Minh Tu said.
With regard to interest rate, under the government instruction, commercial banks have actively reduced interest rate. At present, interest rate between deposit and lending are 3% or even lower, but banks will continue reduce interest if possible.
Besides, representative of SBV said, the Law on supporting SME has been approved by the national assembly, which will be effective in January 01, 2018, and is expected to be an opportunity to improve the enterprises’ access to bank’s capital and breakthrough for enterprises development. This is also the first law in Vietnam specialized in supporting SMEs, creating legal framework and foundation for activities supporting SMEs in the country. “However, the law alone is not enough, it is neccessary to have some intructions with regard to the law in forms of decrees and circulars, so that the law will be implemented effectively” – Mr. Tu said.
Leaders of SBV said, in the coming time, in order to expand the credit effectively and meet the demand for capital in production and business of SMEs, the banking system will focus on implementing consistent measures. Specifically, the banking system will cooperate with related ministries and provinces in implementing supporting policies for SMEs, which has been regulated in the Law on supporting SME, especially policies on credit guarantee for SMEs in lending from credit institutions or SME development fund.