Only 30 percent of small- and medium-sized enterprises (SMEs) in Vietnam have access to bank loans, while the rest rely on their own capital or loans from other sources at high interest rates, according to K. Balasingam, General Director of the Institute of Manpower, Banking and Finance (BITC).

SMEs are experiencing a number of hardships, including difficulties in accessing loans and having to suspend operations, Balasingam said at a workshop in Hanoi on November 18.

Sharing the same view, Director of the Institute for SME Management Pham Ngoc Long said it was challenging for SMEs to grow if they did not receive support from the State. According to Long, since 2011, the number of SMEs in Vietnam has increased significantly, but competitiveness was low, while access to capital remained limited.

He cited a survey conducted by the Institute for SME Management, which found that only 32.38 percent of SMEs regularly received loans, while another 35.24 percent said they faced difficulties in seeking credit. The remaining SMEs considered loans inaccessible.

Meanwhile, the banking system lacked stable middle- and long-term capital resources with reasonable interest rates that met the needs of SMEs, Tran Trung Kien, Deputy Director of Corporate Clients at Techcombank, admitted.

He noted the financial transparency of SMEs was still low, while banks needed to base the provision of loans on businesses’ financial reports, adding that business plans were usually not persuasive enough.

Kien pointed out the vulnerability of SMEs, elaborating that after taking out loans some SMEs moved their headquarters or filed for bankruptcy, making it hard for banks to process the outstanding debt.

He urged SMEs to improve the transparency of their financial reports and operational effectiveness.

At present, the majority of businesses in Vietnam are SMEs, creating jobs for more than half a million people each year and generating more than 40 percent of the country’s GDP.-VNA