Businesses not sure how to access, use loans


In late 2022 and early 2023, enterprises complained they found it difficult to access bank loans. But this is different now: it is not difficult to borrow money, but businesses are not sure how to use the borrowed capital.

Nguyen Ngoc Hoa, chair of the HCM City Union of Business Associations (Huba), told VietNamNet on the sidelines of the press conference on May 11 that ‘"the situation is changing too rapidly".

Enterprises cannot sell products as domestic demand and export markets all have shrunk. In general, enterprises are trying to hold out and are seeking every order. Some enterprises have had to sell part of their assets to pay debts, or they will be listed among the enterprises with bad debts which banks don’t want to lend money to.

According to Hoa, in late 2022 and early 2023, enterprises complained bank loans were inaccessible. But now they can easily borrow money, but don’t know what to do with the capital to optimize profits.

Banks want to lend money instead of keeping money in coffers. And they have to cut interest rates further.

“About 50 percent of businesses in HCM City are facing difficulties. They have scaled down production and are running business at a moderate level. Businesses have downsized workforces and cut working hours,” Hoa said.

A representative of the State Bank of Vietnam (SBV), at a conference on May 11 discussing solutions to step up production, said the agency has deployed measures, but credit growth in the first months of the year was still low.

This was attributed to decreased demand credit in the economy. Some clients had capital demand, but could not satisfy the requirements to borrow money, or had legal problems.

After a long period of the national economy struggling, the risk levels assigned to clients are higher, so banks have to be very cautious when releasing decisions on disbursement. 

To ensure safety for the whole banking system, they must observe regulations and must not lower credit standards.

Tax cuts

To help ease difficulties for enterprises, SBV has proposed that the fiscal policy be expanded to improve the liquidity of the economy by accelerating the disbursement of public investments. 

To implement the plan to slash interest rates as per the government’s request, it is necessary to reduce the budget cash balance and increase the amount of money put into circulation.

Regarding trade policies, there should be solutions to accelerate trade promotion activities, and expand export markets and increase orders, thereby creating more jobs and increasing the credit demand. 

At the same time, it is necessary to settle the problems of the real estate and corporate bond markets, and step up both demand and supply of credit.

Hoa of Huba stressed that it would be better to consider exempting or reducing taxes in this difficult period, such as cutting vehicle registration tax. 

Despite economic difficulties, there are still clients capable of buying houses and cars and they should be encouraged to implement purchase plans.

Hoa praised the VAT policy because it can help stimulate domestic demand. The lower VAT helps make products cheaper and boosts sales. If the tax was not lowered, businesses would not be able to sell their products, and the State would lose a source of revenue.

Hoa stressed that the life cycle of policies should be longer in order to extend their effects. All policies need time to become effective. Therefore, the VAT tax cut from 10 percent to 8 percent should be applied until the end of the 2024 Tet holiday to boost domestic demand, he said.

When private investments shrink, public investments need to be accelerated. When Vietnam invests in infrastructure and roads, education and healthcare, the steel and cement industries will sponge on the investments and generate jobs.

It is estimated that the US, Europe and China account for 60 percent of Vietnam’s export markets. In current conditions, enterprises need support to develop new markets to boost sales and disperse risks, including markets in South America and the Middle East.

HCM City has announced it will organize a business forum, the fourth of its kind – HEF 2023 on September 13-17 --  to provide information about markets and potential business fields.

According to Viet Analytics, 50 percent of enterprises said their revenue dropped in 2022 and businesses’ profits fell by 55 percent.

Tran Chung