Workers at Trung Dung Co Ltd, a manufacturer of elastic threads and yarn in Tan Trieu Commune in Hanoi’s suburban district Thanh Tri. The company employs around 200 employees. (Photo: VNA) Hanoi (VNA) - A forumon measures to improve capital access for small- and medium-sized enterprises(SMEs) took place in Hanoi on August 8, looking at difficulties of both firmsand banks in the matter.
According a report of the VietnamChamber of Commerce and Industry (VCCI), loans provided for SMEs account for 21percent of the total outstanding loans. Up to 60 percent of SMEs are stillunable to access or use bank capital, particularly start-ups who begin withideas and plans rather than capital and assets.
The SME Development Fund, set upin 2014 with total capital of 2 trillion VND (88 million USD), has so far lent145 billion VND to 19 businesses, heard the forum.
VCCI Chairman Vu Tien Loc saidthe credit shortage for SMEs is blamed on three parties. The first is the Statewhose representatives are the State Bank of Vietnam and other relevantministries and agencies. The second is banks and financial institutions, andthe third is the micro, small and medium-sized enterprises (MSMEs).
On the state side, there arestill many legal regulations that do not encourage investment and creativebusinesses, according to Loc. Banks and other financial institutions are stillin favour of State-owned enterprises and enterprises having asset collateral.
However, he pointed to the factthat the digital economy, startups and agricultural businesses do not have alot of assets, while such important resources as business projects and ideasare less likely to be considered proper collateral.
Meanwhile, a majority of nearly700,000 MSMEs in Vietnam do not have collateral assets, many demonstrate lowtransparency and weak governance, Loc noted, adding that is the reason whybanks and other financial institutions say no to them.
Sharing the VCCI Chairman’sopinion, Nguyen Quoc Hung, head of the central bank’s Credit Department,admitted difficulties that the business group still faced in accessing bankloans are due to their lack of not only collateral but also attention toupdating business activities and preparing financial statements. Theirfinancial data is often slowly updated, inaccurate and not reviewed byindependent audit, affecting the evaluation process for bank loans.
He said weak performance ofauthorities and guarantee funds at localities is also added to the problem.
Experts at the forum recommendthat the three parties involved ought to work together to clear the riddle.
VCCI Chairman Loc said the Stateneeds to step up reform in terms of legal framework, which would encourage bankloans offered to SMEs and startups.
He suggested that banks consideraccepting mortgages in the form of ideas, business and production plans fromstartups and high-tech agricultural companies, while financial and insuranceinstitutions should better interact with the group to facilitate them.
Loc also stressed the necessityof a transparent management system and capacity building for drafting businessplans among enterprises.
Hung, meanwhile, suggested buildinga mechanism to tackle risks associated with loans for SMEs.
According to financial expert CanVan Luc, the State needs to quickly implement an effective legal framework forsupporting SMEs, while strengthening the role of business associations and cooperationamong financial institutions and credit guarantee funds.
Meanwhile, small businessesshould also improve transparency, disclosure and willingness to work withcredit institutions.-VNA
VNA
