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In 2024, Financial Leasing credit outstanding growth is forecasted to reach 20%, with the main leasing products being various types of automobiles, construction and excavation machinery, and production machinery and equipment.

The prospects of the Financial Leasing industry in 2024

According to Lao Dong newspaper, Financial Leasing has significant room for development in 2024 as public investment continues to be promoted and serves as an economic growth driver for the entire country. Moreover, Vietnam remains an attractive destination for FDI enterprises which are familiar with Financial Leasing services. Emerging industries in the electronics sector that require investment in machinery and equipment open up great potential for the Financial Leasing industry. Additionally, the trend towards a green economy and circular economy requires green credit funding from financial institutions, including Financial Leasing.

(Source: https://thitruongtaichinhtiente.vn/thi-truong-cho-thue-tai-chinh-huu-hieu-nhieu-tiem-nang-nhung-chua-phat-trien-49676.html)

In particular, the new legal framework will be supplemented with guidance when the amended Law on Credit Institutions takes effect from July 1, 2024, for the Financial Leasing sector. Financial Leasing transactions with the value under VND 100 million, such as office equipment and consumer asset leasing for households in residential areas, are regulated by the amended Law on Credit Institutions as not requiring control purpose of capital usage.

The forecast for O/S growth in the Financial Leasing sector in 2024 is expected to reach 20%, with the main products still being diverse automobiles, construction and engineering machinery, along with production machinery and equipment.

The outstanding advantages of financial leasing compared to traditional borrowing

Considered a market with significant development potential, Financial Leasing has four key advantages that are highly suitable for the current context, especially for SMEs, startups, and individual production and business households.

Firstly, Financial Leasing does not require collateral with a financing ratio of up to 100% of the leased asset value. Financial Leasing is considered as one of the optimal methods for businesses to easily access capital, as the financing can reach up to 100% of the leased asset value without requiring collateral.

In addition, Financial Leasing also offers sale and leaseback services that help businesses supplement their working capital for production and business activities. Businesses can sell their operating machinery and equipment to a financial leasing company and then lease them back for long-term use. This enables businesses to unlock the value of their assets and utilize them while maintaining operational continuity.

Secondly, Financial Leasing provides direct financing through the asset itself. Offering long-term credit directly through machinery and equipment to businesses helps prevent misuse or economic bubbles in the economy.

Thirdly, Financial Leasing helps businesses utilize their capital structure effectively and diversify their sources of funding. In addition, the clear payment schedule with flexible options in the Financial Leasing contract allows businesses to proactively plan their business strategies and manage cash flow efficiently.

Fourthly, using Financial Leasing products does not affect the credit limit of banks. With the strength of high financing ratios, no collateral requirements, and flexible lease terms, businesses can efficiently leverage various sources of funding while maintaining their credit limit at the bank.

BSL is a reputable financial leasing company in Vietnam. With the support from two leading financial institutions in Vietnam and Japan, BIDV and SuMi TRUST Bank, BSL provides professional financial leasing solutions for Vietnamese businesses. In 2023, BSL achieved a credit growth of ~27%, surpassing the average growth rate of both financial leasing companies (13.75%) and the entire banking industry (13.5%).

Businesses show great interest in Financial Leasing (Image source: BSL)

Thao Nguyen