The State Bank of Vietnam (SBV)’s monetary policy management has contributed significantly to macro-economic stability and inflation control, said Cao Sy Kiem, Chairman of the Association of Small and Medium Enterprises.

Kiem made the remark at a recent press conference hosted by the SBV on the issues related to enterprises’ access to bank loans, lending interest and non-performing loans (NPLs) resolution.

He held that in the context of difficulties in the economy, the central bank has managed the monetary policy in a flexible and prudent manner and achieved encouraging results such as lower interest rates, stable exchange rate, increasing official reserves, and stable credit performance.

In response to the Government’s directions, especially Resolutions No.01 and No.02, the SBV has managed the monetary policy effectively. As a result, in the first four months of 2013, lending interest rates have been continuously reduced by 2-4 percentage points. Particularly, the lending rate for five priority sectors has been cut down to 8 -10 percent and a number of enterprises have borrowed loans with interest rates of 7.5-8 percent. As a matter of fact, the prevailing interest rate is now back to the level of the 2005-2007 period.

According to economists, interest rate has not been seen as a dominant factor constraining enterprises to get access to bank loans, but the main reason for that problem is the large amount of inventory goods due to the low purchasing power of customers.

“The main problem today is not the interest rates, but the capital absorption of the economy,” Kiem said. “In order to help enterprises sell out inventory goods, it is necessary to enhance the aggregate demand and purchasing power of the economy.”

Dao Van Hung, Director of the Institute of Policy and Development of Ministry of Planning and Investment, said that the current interest rate is reasonable for economic recovery in Vietnam . However, he said, in order to increase capital demand of enterprises, the key factor is to raise the aggregate demand of the economy.

Therefore, he called for coordinated efforts to synchronously implement various measures with a focus on the monetary and fiscal policies.

He also said that the steps of interest rate management conducted by the SBV are appropriate. The interest rate management should be based on target inflation, and interest rate reduction can only be realised when inflation rate falls.

The targeted inflation rate in 2013 is about 6.5-7 percent and the current interest rates are proper, hence contributing to both meeting businesses’ capital demand and protecting the benefits of depositors, he said.

In his address, SBV Deputy Governor Le Minh Hung said that on May 21, 2013, the Prime Minister signed a decree on the establishment of the Vietnam Asset Management Companies (VAMC).

Through the acquisition and resolution of NPLs, he added, VAMC will contribute to reducing debt repayment pressures and assisting businesses in solving temporary financial difficulties.

According to Kiem, both enterprises and commercial banks need to be proactive in solving difficulties, but not only relying on the VAMC.

In order to thoroughly resolve NPLs, he said, businesses need to restructure themselves more appropriately, and consolidate and strengthen their management and governance.-VNA