Illustrative image (Source: VNA) Hanoi (VNA)- Policies related to credit guarantees need to be revised to improve thecredit access of enterprises, especially small- and medium-sized enterprises(SMEs) and micro firms, Deputy Prime Minister Vuong Dinh Hue said on December13.
He emphasised theimportant role of credit guarantee mechanisms given that the State budget islimited and the business community has not received significantly efficientsupport.
In 2011, the then-PrimeMinister issued a decision on credit guarantee mechanisms for SMEs to accessloans from commercial banks. In 2013, another decision on establishment ofcredit guarantee funds in provinces and cities was promulgated.
Deputy Minister of FinanceTran Van Hieu said that the legal framework is expected to create favourableconditions for SMEs to access capital from credit institutions in order tomaintain operation and expand production.
Currently, there are 27credit guarantee funds nationwide but most of the funds have weak financialcapacity because the capital comes mainly from local State budgets, Hieu said.
Credit guarantee fundshave three sources: local State budgets, contributions from enterprises, andfinances from domestic and foreign organisations. The overseas source is almostinsignificant while contributions from enterprises are not regular as they haveto struggle themselves.
The total chartercapital of the 27 funds is approximately 1.4 trillion VND (65 million USD)while the amount of guaranteed loans reaches 361 billion VND.
Nguyen Chi Trang, DeputyGeneral Director of the Vietnam Development Bank (VDB) which is also assignedby the Government as a guarantor for SMEs, said the bank’s guarantee activitiesare hindered by the inconsistencies in the project appraisal procedures by VDBand commercial banks, not to mention the shortage of money.
Due to theinconsistencies, it takes SMEs up to three months to get loans, Deputy Governorof the State Bank of Vietnam Nguyen Dong Tien said.
The Vietnam Associationof Small and Medium-sized Enterprises Chairman Cao Sy Kiem told theVietnam News Agency that the majority of enterprises hesitated to use creditunderwriting to borrow bank loans.
He attributed thehesitation to complicated procedures in accessing the guarantee service. Whenfirms deal with both guarantee funds and commercial banks, they face the sameassessment process but have to pay fees twice, he added.
The lack of closeco-operation and mutual confidence between guarantors and commercial banks isalso an obstacle for SMEs to receive supports, Kiem said.
Given the situation,Deputy PM Hue asked relevant ministries and agencies to work out clear criteriato define which enterprises really need supports.
He assigned the Ministryof Finance to revise the credit guarantee mechanism, study the possibility ofproviding guarantee service without requiring collaterals, and set reasonableguarantee fee levels. - VNA
He emphasised theimportant role of credit guarantee mechanisms given that the State budget islimited and the business community has not received significantly efficientsupport.
In 2011, the then-PrimeMinister issued a decision on credit guarantee mechanisms for SMEs to accessloans from commercial banks. In 2013, another decision on establishment ofcredit guarantee funds in provinces and cities was promulgated.
Deputy Minister of FinanceTran Van Hieu said that the legal framework is expected to create favourableconditions for SMEs to access capital from credit institutions in order tomaintain operation and expand production.
Currently, there are 27credit guarantee funds nationwide but most of the funds have weak financialcapacity because the capital comes mainly from local State budgets, Hieu said.
Credit guarantee fundshave three sources: local State budgets, contributions from enterprises, andfinances from domestic and foreign organisations. The overseas source is almostinsignificant while contributions from enterprises are not regular as they haveto struggle themselves.
The total chartercapital of the 27 funds is approximately 1.4 trillion VND (65 million USD)while the amount of guaranteed loans reaches 361 billion VND.
Nguyen Chi Trang, DeputyGeneral Director of the Vietnam Development Bank (VDB) which is also assignedby the Government as a guarantor for SMEs, said the bank’s guarantee activitiesare hindered by the inconsistencies in the project appraisal procedures by VDBand commercial banks, not to mention the shortage of money.
Due to theinconsistencies, it takes SMEs up to three months to get loans, Deputy Governorof the State Bank of Vietnam Nguyen Dong Tien said.
The Vietnam Associationof Small and Medium-sized Enterprises Chairman Cao Sy Kiem told theVietnam News Agency that the majority of enterprises hesitated to use creditunderwriting to borrow bank loans.
He attributed thehesitation to complicated procedures in accessing the guarantee service. Whenfirms deal with both guarantee funds and commercial banks, they face the sameassessment process but have to pay fees twice, he added.
The lack of closeco-operation and mutual confidence between guarantors and commercial banks isalso an obstacle for SMEs to receive supports, Kiem said.
Given the situation,Deputy PM Hue asked relevant ministries and agencies to work out clear criteriato define which enterprises really need supports.
He assigned the Ministryof Finance to revise the credit guarantee mechanism, study the possibility ofproviding guarantee service without requiring collaterals, and set reasonableguarantee fee levels. - VNA
VNA
