Vietnam SMEs to struggle to access bank loans in 2011
January 05 2011
Source : Vietnam Business News
Vietnam’s small and medium-sized enterprises (SMEs) will have to struggle more to borrow from local lenders amid tightening monetary policies in 2011 reflecting in the credit growth target of 23%, the local newswire Lao Dong reported.
How to provide cheaper funds to local firms and curb inflation at the same time would be an issue in 2011, said Le Xuan Nghia, Vice Chairman of Vietnam National Financial Supervisory Commission.
Specialists said local SMEs also struggle to access funds from equitization, issuing bonds, stocks as these firms are not attractive enough in sizes, reputation, assets and transparency of information to attract capital inflows.
Although some venture capital funds are now providing funds to support unlisted firms without requiring collaterals including SEAF, they often require local lenders to have positive historical cash flows, high potential growth, transparent financial statements and clear business strategies, etc., said an economist.
Ironically, these funds only lend and receive dollars, and charge higher lending interest rates than local banks, making not every local firm affordable.
Besides, some big funds are investing in local firms by purchasing shares and directly managing the firms, putting these enterprises into a trade-off situation between capital and profits.
Vietnam has to date had over 500,000 local enterprises, of which 95% are small and medium-sized, said the Vietnam SME Association, adding that local SMEs have contributed up to 50% of total export revenues, 20% of GDP and used 50% of labors.
However, Cao Sy Kiem, the central bank’s former governor said that Vietnam has so far had no preferential capital policies exclusively applied for SMEs. – Stoxplus.com