Poor access to loans hinders production development

Difficulties in borrowing money from banks have made it difficult for farmers to develop agricultural production in Hanoi.
Poor access to loans hinders production development ảnh 1Illustrative image (Source: VNA)
Hanoi (VNA) - Difficulties in borrowing money from banks have made it difficult for farmers to develop agricultural production in Hanoi.

Tran Dinh Thanh, head of the Farmers Association of Ba Vi district’s Cam Linh commune said the association includes 61 households raising a total of 270,000 chickens, reported by Tien Phong (Vanguard) newspaper.

It needs 17 billion VND (748,000 USD) to maintain their breeding activities, he said.

This meant each household was required to contribute about 300 million VND (13,200 USD).

However, most of them could borrow only 100 million VND (4,400 USD) from banks because to borrow more, banks required farmers to use their land-use right certificate as collateral, he said.

Most households rent land for breeding farms, so they have no land-use right certificates.

Ngo Thanh Tung, head of a group of animal breeders in Dong Anh district’s Viet Hung commune in Hanoi said the group is raising more than 50 sows and hundreds of pigs.

The group provides jobs for more than 20 local labourers with regular income of 3-5 million VND (132-220 USD) each month, he said.

Yet he and other breeders could only access 12 month loans from the State Bank of Vietnam (SBV). The short-term loans affected the breeders’ mindsets as they had to pay their loans back quickly, he said.

Thành said he hoped the Government would help farmers could borrow middle and long-term loans in the future.

In June 2015, the Government issued Decree 55/NĐ-CP, aiming to create favourable conditions for farmers to borrow money with preferential treatment. Under the decree, farmers can get a loan from 50 million – 3 billion VND (2,200 - 1.3 million USD) but were required to give banks their land-use right certificates before receiving money.

A representative from the SBV admitted to shortcomings in providing loans for farmers.

Nguyen Tien Dong, head of the SVB’s Credit Department said he knew many famers who failed to borrow money due to the need to provide land-use right certificates as collateral.

He said the SVB will ask the Government to amend regulations on mortgages to fix the shortcomings.

Economist Can Van Luc said lending money without collateral should be carefully considered because banks would risks borrowers failing to pay back their loans.

It is easy to see why banks had to carefully calculate the feasibility of a project before lending money, he said.

Luc said authorised agencies are advised to provide training for farmers so that they use the money they borrowed from banks effectively. When they present a feasible plan, they can borrow money from banks easier.-VNA

See more