Illustrative photo. (Source: VNA)

Hanoi (VNA) – The State Bank of Vietnam (SBV) is drafting a circular guiding credit policy to make it easier for local support industries to access loans and make them more competitive during integration.

Decree No 111/2015/ND-CP released in November, with regard to the development of support industries states that they can access assistance, funds and other sources for research, development and training.

Support industries include textiles and garments, leather and footwear, electronics, and automobile manufacture and assembly, in addition to mechanical engineering and products of support industries for hi-tech, and individuals and organisations conducting production research and developing products on the priority list.

According to economist Ngo Tri Long, support industries have a great potential for development in the context of integration but most of the local enterprises in the industries are small- and medium-sized enterprises (SMEs) which find it difficult to access good loans. This results in their costs and expenses rising, which makes it difficult for them to compete in the integration.

Thus, the draft is in accordance with Decree 111/2015/ND-CP, which took effect from January 1, 2016, and aims to boost the development of local support industries.

In the draft, SMEs of support industries cannot only enjoy an incentive short-term lending rate which does not exceed the short-term lending interest rate, but they can also be considered for loans up to 70 percent of the investment capital. The draft states some pre-conditions for the loans. They must have a total asset value of at least 15 percent of the loan while the equity participation must spend at least 20 percent on investment projects. Moreover, at the time of requesting loans, the enterprises cannot have any outstanding debts.

While welcoming the draft, Le Quoc Hiep, owner of a support industry business in HCM City's Binh Tan district, said the SBV should clarify which banks the SMEs should go for their loans and what are the fixed interest rates for the loans. They should also clarify what obligations banks require as there are many banks which are not always willing to lend to support industries like his.

The Vietnam Chamber of Commerce and Industry says that by 2020, Vietnam will be aiming to become an industrialised country with high competitiveness of support industry products and meet 45 percent of essential demand for domestic production, consumption, while exporting 25 percent of its industrial production value.-VNA