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Credit growth in the first 11 months of 2023 has only reached about 65% of the plan, while lending rates have decreased significantly. The Government and the State Bank have made every effort to inject capital into the economy.

What are the reasons behind the low credit growth?

Despite numerous resolutions and documents issued by the Government and the Prime Minister, as well as directives from ministries, sectors, and localities, along with efforts by the State Bank of Vietnam to enhance the accessibility and credit absorption capacity of the economy, stimulate economic and social recovery and development, credit growth in the first 11 months of 2023 stood at 9.15%, significantly lower than the annual target range of 14-15%.

According to Mr. Pham Xuan Hoe, the Secretary-General of the Vietnam Financial Leasing Association, the main reason for this situation lies in the fact that in order to access capital, especially for small and medium-sized enterprises (SMEs), businesses need to demonstrate transparent and healthy financial conditions.

For operating businesses with complete invoices, documents, and proper accounting of all outstanding debts, proving the financial soundness should not be a challenging task. However, demonstrating transparency becomes a headache for businesses when it requires the involvement of an independent auditing company. However, obtaining a conclusive assessment from auditors that affirms the transparent investment, production, business activities, and financial conditions of the enterprise is not a simple matter.

The supportive loan policies for businesses are also not very promising. The reasons for this include businesses being eligible for support but choosing not to benefit from the policies due to concerns about inspections and audits, as well as the additional costs associated with receiving interest rate subsidies (such as monitoring files, reports, compliance with post-audit, inspection, and verification procedures by relevant state authorities). Some businesses have existing outstanding debts in industries or sectors eligible for interest rate support but have not received such support due to having overdue debts.

Solutions to push capital into the economy

In reality, there are various methods to push capital into the market, but they have not been effectively communicated, leading to the insufficient access to capital support for businesses.

National small and medium-sized enterprise (SME) funds in countries like South Korea, Japan, and Taiwan operate very effectively and serve as a capital source for businesses when they cannot access bank loans. Vietnam currently has about 25-26 SME credit guarantee funds but they cannot guarantee credit for small and medium-sized enterprises.

Mr. Hoe shared that the reason for this is that the guarantee funds have very limited capital, and Vietnam’s credit guarantee mechanism is cumbersome, requiring extensive documentation, paperwork, and guarantee fees. The proposed solution is to allocate around 20 trillion VND out of the 40 trillion VND in interest rate subsidies to support the guarantee funds and fundamentally change the credit guarantee operation for SMEs.

Another proposed solution is to consolidate non-budget financial funds (such as the National Science and Technology Development Fund, Small and Medium Enterprise Development Fund, Environmental Protection Fund, Cooperative Development Support Fund, etc.) that are currently scattered across different ministries and sectors to establish a single fund with a system from central to provincial levels, utilizing a portion of the 40 trillion VND capital allocation to provide financial support to businesses.

Furthermore, there is an efficient medium to long-term capital channel for businesses, especially SMEs, which is Financial Leasing. With notable advantages such as high financing ratios, no collateral requirements, and no impact on credit limits at banks, businesses can easily access financing from the financial leasing channel to support their production and business activities. The assets available for financial leasing are diverse, including various types of vehicles, medical equipment, construction machinery, mining equipment, production machinery, etc., catering to the needs of businesses’ production and operations.

Thao Nguyen

(Source: Compiled from Tin nhanh chứng khoán: https://www.tinnhanhchungkhoan.vn/tim-cach-day-von-ra-thi-truong-theo-huong-khac-post336467.html)