Exporters say loan subsidy program of little use to them

Exporters said they do not benefit much from a government loan subsidy program since not many of them qualify for bank loans.

Speaking at a conference in Ho Chi Minh City Tuesday, Vo Truong Thanh, general director of Truong Thanh Furniture Corporation, said it is banks who have benefited from the loan subsidy program, which has helped get credit flowing again.

Truong Dinh Tuyen, a monetary advisory board member, agreed, saying that the program does not mean as much to exporters as it does to banks.

The government is using VND17 trillion (US$970 million) from an economic stimulus package to provide a 4-percent interest subsidy on loans to companies that export, import or produce essential goods.

The State Bank of Vietnam said commercial banks expect to lend companies around VND400 trillion ($23 billion) in February and March.

But exporters said some commercial banks are too cautious to lend businesses under the program.

Businesses are required to repay existing loans, including those not due yet, before they can borrow afresh at subsidized rates, Nguyen Duc Thanh, president of the Vietnam Cashew Association, said.

Few businesses qualify for a new loan while many have had to shut down due to a cash crunch, he told the conference.

Of the country's 220 cashew processors, 85 percent are ineligible for loans under the program, Bloomberg last week quoted Thanh as saying.

Chu Van An, deputy general director of Minh Phu Seafood Company based in southern Ca Mau Province, said the loan procedures are complicated.

Banks refuse to provide loans for paying value added tax, saying the loans are only meant for working capital, he said, claiming this contradicts what the central bank told businesses.

Tran Quoc Manh, deputy chairman of the HCMC Handicraft and Wood Industry Association, said the loan subsidy program means nothing to many businesses since they already have unpaid loans and no longer have assets for collateral.

Nguyen Van Tan, director of the Hanoi-based Thong Tan Foodstuffs Trade and Processing Company, told Tuoi Tre newspaper his company is unable to apply for new loans because all its assets are already pledged.

It wants to repay the loan but has no money since customers have yet to pay for shipments made before Tet (the lunar New Year) at the end of last January.

Around 20 percent of small and medium-sized enterprises in Vietnam are facing critical cash and management problems and are likely to go bankrupt without financial support, Tien Phong newspaper Wednesday quoted Cao Sy Kiem, president of the Vietnam Association for small- and medium-sized enterprises (SMEs), as saying.

But many company executives at the meeting said that larger businesses also need cheap loans.

Thanh of Truong Thanh Furniture Corporation suggested that the loan subsidy program should be expanded to include more companies. The company, based in southern Binh Duong Province, now targets only SMEs with not more than VND20 billion in capital and 500 workers.

He said SMEs do not earn as much from exports or create as many jobs as large businesses.

To help exporters

Deputy Minister of Industry and Trade Nguyen Thanh Bien told delegates that his ministry would ask the government to tweak its stimulus plan to benefit exporters more.

For instance, businesses with effective new projects should be provided credit to repay their old loans, he said.

Thanh of the Vietnam Cashew Association said most exporters have been hit hard by the global downturn and need government support to promote their products and look for new markets.

Exports fell 5.1 percent year on year to $8.02 billion in the first two months, according to the General Statistics Office.

The government has forecast export growth to slow down to 13 percent this year from a scorching 29.5 percent in 2008 because of the economic downturn in important markets like the US, Europe and Japan. Exports were worth $62.9 billion last year.

The government should also depreciate the dong to support exporters, Tuyen said.

The government is considering how to devalue the dong without stimulating speculation, Tuyen, who is also a former trade minister, told companies demanding a weaker dong at the meeting.

The central bank devalued the currency by 3 percent on December 25. The dollar can trade within a 3 percent band on either side of a rate fixed daily against the dong.

PROGRAM TO INCLUDE FINANCE FIRMS

The government has included some non-bank finance companies in its loan subsidy program after they warned they may lose customers to banks.

The program, which was available to only commercial banks and people's credit funds, will now be extended to include non-bank finance companies – except those providing consumer loans and credit cards and those with bad debts exceeding 5 percent – according to a statement posted on the government's website on Tuesday.

The Vietnam Banks Association had asked the government Monday to include non-bank financial firms.

The government targets economic growth of at least 6.5 percent this year, compared with last year's 6.2 percent, the slowest pace in nine years.

It said it would spend VND300 trillion (US$17 billion) this year to halt a slowdown in economic growth amid the global financial crisis. The amount, almost a quarter of the country's $71 billion GDP, would be used to develop infrastructure, spur exports and fund other social development projects.

Source: TN, Agencies (With additional reporting by Minh Quang)

Đăng ký website của bạn vào danh sách này!

Vietnam virtual office
Virtual office solutions bring geographically dispersed employees virtually together into the same workspace, thereby supercharging teamwork and cooperation between previously isolated resources

Apartment for rent in vietnam
Factory & warehouse for rent in Hochiminh city - Vietnam

Sapa
Sapa hill tribe village 2 days/3nights code 18

Real estate in Hochiminh

Real estate in Vietnam
Properties for rent in Vietnam - partments for rent in Hochiminh

Vietnam manufacturer
Ha Linh is a home accessories company in Vietnam

Sapa
Sapa travel tours

Vietnam manufacturer
Pressed bamboo wares with rattan

Vietnam trade fair
Welcome to LifeStyle Vietnam - Please visit our website: http://www.lifestyle-vietnam.com/

Vietnam trade fair
Vietnam Trade Promotion Agency (VIETRADE), this fair becomes the most specialized event for handicrafts and furniture in Vietnam.

Vietnam Furniture
LifeStyle Vietnam - A festival of handicraft and furniture exporters in Vietnam.

Vietnam home textile