President of the Vietnam International Arbitration Centre Vu Tien Loc addresses a conference discussing how to better assist businesses in HCM City on February 6. (Photo: VNA)
Economists called for the central government to take measures to bring down therates, which have been sitting around 10% in recent months.
Tran Viet Anh, director-general of the Nam Thai Son Import/Export JSC., said amajority of businesses were not interested in fresh loans but lower rates wouldbe a significant help as they faced lower demand and struggled to keep workers.
There are businesses with credit room but still reluctant to apply for loansdue to high rates, which will contribute to higher operational costs, he added.
Even developers for social housing projects were not immune as they were forcedto borrow at regular rates.
Le Huu Nghia, director of the Le Thanh Construction JSC., said many socialhousing projects had to borrow at 14%, roughly the same as other commercialprojects. It certainly will not help bring down housing costs in the market.
Despite a directive from the State Bank of Vietnam to give preferentialpolicies to social housing developers, commercial banks have been slow inimplementing them, citing a lack of guidance from the central bank.
Nguyen Ngoc Hoa, president of the Ho Chi Minh City Union of Business Associations(HUBA), said as current rates sit above 10%, it's very unlikely for businessesto stay financially viable and stressed the need for measures by the centralbank and the government to step in to bring it down in the next six months.
Hoa said a large portion of businesses uses their property assets ascollaterals. As the property market has been hit with a cold spell, money havebecome difficult to come by as banks tightened their purse string.
Professor Tran Dinh Thien, former head of the Vietnam Institute of Economics,said as inflation started to pick up and numerous disruptions experienced bythe domestic and the international markets, high rates have been making lifedifficult for businesses.
He said injecting money through public spending could be useful at a time likethis but this channel has been known to be sluggish and inadequate in respondingto market changes in a timely manner. Even public fund disbursements aimed atspeeding up economic recovery have been slow due to a number of legal andframework barriers.
"There are always the same issues with our financial market and publicinvestment we must address, especially with the corporate bond market and thestock market, to enhance trust and reduce risk across the banking system,"Thien said.
President of the Vietnam International Arbitration Centre Vu Tien Loc said thecountry's long-term economic prospect depends a lot on the development of itsbusiness community. He stressed the importance of establishing a morestreamlined and transparent framework for the financial market.
"Our businesses can only operate as well as the business environmentallows. Improving business performance can only be done along with improvingthe business environment," he said.
Loc called for the removal of cumbersome and unnecessary business conditions,stronger administrative reform and shorter import/export processing./.
VNA
