SMEs struggle from capital shortage
06/08/2010 - 166 Lượt xem
At present, though SMEs with a capital of under VND5 billion (US$315,000) account for 96 per cent of Vietnamese enterprises, only 30 per cent of them have access to State-owned capital sources.
Despite capital shortage remaining a severe problem for SMEs, most of these companies depend on families and friends, instead of banks, to mobilise capital, said Pham Thi Hong Thai, chairwoman of the central Nghe An Province’s SME Association, pointing out only large firms receive support from commercial banks, investment funds and Government lending projects.
"While we desperately need access to bank loans, around 70 per cent of SMEs are denied loans, owing to their inexperience in planning and presenting projects. This has resulted in the denial of capital for even feasible projects," Thai added.
Nguyen Tien Dung, chairman of the Toan My Joint-stock Co’s management board, said while enterprises were allowed to borrow 70 per cent of the collateral asset value, they require at least 80 per cent for technological innovations and modernisation.
According to a director of a commercial bank, banks were hesitant in giving loans because of loan security regulations, which avoid risks, and lack of transparency in financial accounts of enterprises.
In addition, small enterprises, having low management skills, find it difficult to utilise capital to the maximum, he added.
Deputy Chairman of the Vietnamese SMEs’ Association pointed out that confidence was the key problem faced by SMEs looking for loans. Banks will be willing to grant more loans if they have more confidence in enterprises, he stressed.
Source: Vietnam News, 15/2/2006
