Good news

CIEM says that 44 percent of banks have provided loans for SMEs with a capital level accounting for 38 percent of outstanding debts. Most banks have increasingly lent SMEs credit loans and helped them find it easier to access bank loans.
In fact, SMEs have been offered more opportunities to borrow capital from commercial banks. The Foreign Trade Bank of Vietnam (Vietcombank) has shifted its form of operations from wholesale to retail thereby facilitating SMEs’ access to its loans.

Vietcombank has increased level capital for SMEs from VND500 billion to VND3,000 billion. Deputy Head of the Department for Customer Care said, “Over the past five years, loans from SMEs for export-import transactions have hit an annual high growth of 150-200 percent. In the coming period, Vietcombank will continue to give priority to SMEs and foreign-invested enterprises.”

Vietcombank’s attention to SMEs is no an exception while most domestic commercial banks also do the same.

General Director of the Bank for Agriculture and Rural Development Le Van So said, “In the past five years, the capital level loaned by SMEs increased from 3.5 percent to 29 percent, equivalent to VND45,000 billion. Our bank will provide loans for some 150,000 out of 500,000 SMEs. This will be established by the Government in the next five years, making up between 30 and 40 percent of our standing debts. Therefore, the loan level for SMEs will also rise to VND100,000 billion.”

This is actually good news for SMEs in need of capital to develop production and business activities.

Difficulties

The CIEM says that despite SMEs’ effective operations in the production and supply process, banks can face major risks of providing loans for them. The biggest difficulty is the ineffective management of SMEs, leading to a lack of information about loaning procedures. In addition, many banks have encouraged most SMEs to put together plan when asking for bank loans but most are inexperienced in this area.

A half of small and medium-sized enterprises have to reply on banks’ credits, accounting for 30 percent of their capital and during the past five years more than 85 percent of small and medium-sized enterprises have had opportunities to borrow more loans. Banks have said that they provide equal treatment for both small, medium and large sized enterprises however SMEs feel that banks have a bias towards large-sized enterprises.

Completing procedures for enterprises to access capital

Although Vietnam’s investment and business environment has been improved, many economics experts said the country should have more practical procedures for SMEs to access financial sources. Most local SMEs are inexperienced and lack capital so it is necessary to devise procedures to support SMS enterprises to access capital. In recent times, the government has paid great attention to this issue and organised several seminars discussing ways to support SMEs. However, supporting policies for SMEs such as credit guarantee, developing financial institutions and supporting capital through owner’s equity methods are limited, making it inefficient.

One of the supporting procedures for SMS enterprises is to establish credit guarantee funds in localities with capital from local budgets, banks and organisations. However, until now only five localities have established funds but fell behind schedule.

According to Le Van So, this is not due to banks but depends the provincial budget which is a decisive factor in setting up funds. Currently, the BARD has directed its branches to invest a maximum of 6 percent of capital (VND2 billion) in credit funds. Operation regulations should be devised to help credit funds run effectively and support SMS enterprises.

To help SMEs access financial sources, many economic experts said in addition to the great efforts of banks and enterprises themselves, the Government’s role in planning and completing procedures and policies is a very important and decisive factor.

Source: VOV