"At some point, some SMEs have to borrow up to 60 percent of their requirement from [loan sharks]", Mr. Nguyen Kim Hung, general director of Verco Company, said at the Capital-Financial Forum held in Hanoi last August. According to a VCCI survey of 504 businesses’ access to credit done at the end of 2017, 60 percent of small and medium-sized enterprises (SMEs) did not have access to loans from the formal sector. The survey was done as part of a project called "Supporting Vietnamese Enterprises to Improve Access to Credit, Improving Governance and Financial Transparency". Many rigid government policies too act as barriers. Banks favor large loans to large companies because of lower risk. While loans against mortgage remain commonplace, SMEs find it difficult to meet this requirement since there do not have collateral to offer or the value is too low. According to the VCCI survey, over 80 percent of SMEs have capital of less than VND 2 billion. At the end of each year, ahead of the … [Read more...] about Small businesses should reconfigure relationship with banks to get credit: experts
Small business lending fund
The MoU to jointly launch a digital lending platform to benefit SMEs in Việt Nam was signed in HCM City. -- VNS Photo Viet Nam News HCM City – At the 48th World Chief Financial Officers Congress in HCM City yesterday, the AsiaInvest Group and MoolahSense signed a memorandum of understanding to jointly launch a digital lending platform to benefit small and medium-sized enterprises in Việt Nam. “This is an opportunity for SMEs and start-ups in Việt Nam to have a transparent and effective funding source when loans from local banks are limited and hard to access,” Nguyễn Ngọc Bách, chairman and CEO of AsiaInvest, said. The MOU puts in place a roadmap to establish a joint venture that taps into their respective strengths to provide tech-driven financing solutions to address the financing gap plaguing small business in the country. According to the 2017 economic census by the General Statistics Office of Việt Nam, there were … [Read more...] about New digital lending platform for small businesses
A report from the Ho Chi Minh Securities Company shows that bank interest rates have risen by 0.46 percentage points for short-term loans since the end of last year to 7-9 per cent and to 9-12.5 per cent for medium- and long-term loans. — Photo vietnambiz.vn A report from the Ho Chi Minh Securities Company shows that bank interest rates have risen by 0.46 percentage points for short-term loans since the end of last year to 7-9 per cent and to 9-12.5 per cent for medium- and long-term loans. The report named lenders such as Agribank, Military Bank, Sacombank, VP Bank and ACB as adjusting their rates upwards in the last two months. The interest rate hikes are said to be the first sign of the central bank trying to reduce money supply to fight inflation. According to experts from the Ministry of Planning and Investment’s National Centre for Socio-economic Information and Forecast, inflation and exchange rates remain under control but are under great pressure, and so prudent … [Read more...] about Tight monetary policy: where can businesses find funds?
According to a 2018 report by the World Bank, Vietnam's credit access index ranks 29th out of 190 economies surveyed, higher than the average of the Organization for Economic Co-operation and Development (OECD) and East Asia & Pacific. But Vietnamese small and medium-sized enterprises (SMEs) said it is a big challenge for them to access credit. According to the Vietnam Chamber of Commerce and Industry (VCCI), only 30 percent of SMEs in Vietnam have access to loans from the formal sector, with the rest having to use their own funds or depend on unregulated loans. This makes it hard for them to find business opportunities and solve other problems with respect to cash flow, working capital, and debts. The VCCI has drawn up a list of loans types and the challenges each segment faces. Bank loans Many banks have made it possible for SMEs to get access to credit. In the past few years most joint stock banks have earmarked tens of trillions of dong ($1=VND23,381) for priority sectors. … [Read more...] about Who do Vietnam’s small and medium-sized enterprises turn to for funds?
Speaking at a recent seminar entitled “Where can small firms find capital?”, Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City Office, said the SBV and commercial banks have made efforts to help small and medium-sized enterprises (SMEs) get loans. Since 2012, more than 50,000 SMEs have borrowed more than VND900 trillion (US$38.7 billion), he said. However, he conceded that SMEs lack assets to pledge, among other hurdles they face in getting credit. To resolve this problem, the SBV has worked with banks to allow small firms without assets to use their cash flow as collateral, Minh said. He also pointed out that one of the main obstacles to SMEs getting loans is the lack of transparency in their financial statements. “Many small firms are usually household businesses and do not have a chief accountant professionally taking care of financial matters.” He said some businesses even use two sets of books to evade tax, which also … [Read more...] about Banks reach out to small firms, but encounter lack of transparency