Parties struggle to read off same page

10:57 | 05/03/2013

Banks and firms are still struggling to find one voice to talk down the current economic hardships.

In a recent meeting between diverse business associations and banks based in Ho Chi Minh City, An Loc Chemical Informatics, Minh Long Hung and Thang Loi International Garment representatives said big businesses could get bank loans at reasonable interest rates ranging from 10-12 per cent per year,  whereas small capital distressed operators faced high lending rates peaking at 18-21 per cent, per year.

These firms assumed state policies on feeding firms with affordable interest rates have mainly benefited banks whereas many firms, due to a lack of collateral to put at banks, could not access low-cost loans.

Hoc Mon district Ho Chi Minh City-based Business Association chairman  Huynh Van Hai said capital shortages made scores of firms struggle to outline business plans for 2013.

Hai pointed out an example that an association member Bao Long Food Company Limited could not bring its project on producing black chicken fine broth into life due to capital woes.

In fact, up to 20 per cent of Ho Chi Minh City Young Business Association (YBA) members went bust and many others were on the verge of going bankrupt on the back of market sinking demand and firms’ drained finance versus rising inventories, according to an YBA source.  

Regarding the property market, Ho Chi Minh City Real Estate Association secretary Nguyen Thi Loan said albeit the sector bad debts amounted to hundreds of millions of US dollars, firms could not go dissolved since they were debtors to banks.
Meanwhile, banks could not sell firms’ collateral to take back capital since the property had fallen sharply in value. Besides, finding customers has also proven hard in current dormant property market.

Loan said bank interest rates needed to further slide to tackle current bottlenecks and abate bad debts in the property sector.  

Ho Chi Minh City Business Association said bank interest rates should be pulled down to 12-13 per cent.

From their part, commercial banks argued current lending rates were kept at reasonable levels as a result of their big efforts and could hardly go down.

Responding to firms’ concerns, Ho Chi Minh City State Bank branch deputy director Nguyen Ngoc Thang said softer interest rates at around 10 per cent per year as firms expected would be unlikely in current context due to banks’ relatively high mobilising costs and the requirements to set aside remarkable amounts to make provisions and diverse other expenses.

Thuy Vinh

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