HA NOI — A Ministry of Industry and Trade official yesterday suggested the Government force commercial banks to lower lending interest rates to below 12 per cent a year in order to help struggling enterprises through difficulties.
The proposal was made at a conference held by the ministry in Ha Noi yesterday to collect input on ways to help businesses resolve the current stagnancy in production. The Government has assigned the ministry to develop a plan to reduce inventories and support businesses in accessing credit.
The head of the ministry's planning department, Nguyen Tien Vy, said the ministry has already asked the State Bank of Viet Nam to further reduce interest rates to a level commensurate with declining inflation rates. The initial plan has also proposed preferential credits to businesses operating in agriculture, exports, and support industries, as well as small-and medium-sized enterprises.
Vy said several businesses wanted capital to invest in expanding production, but banks were only offering interest rate reductions on short-term loans.
The ministry was also suggesting that firms in support industries receive preferential interest rates and more favourable conditions for mortgaging assets to secure loans. The State Bank of Viet Nam, Vy said, should also support lower interest rates for businesses in the agricultural sector, particularly in financing equipment purchases by farmers.
Viet Nam Chamber of Commerce and Industry general secretary Pham Thi Thu Hang complained that lending has historically only been available of large companies, while small businesses had to struggle to find capital.
Among other ideas discussed at the conference to stimulate production, Nguyen Quang Dung, head of the strategy department for petrol distributor Petrolimex, said the Government needed to concentrate on restructuring State-owned enterprises as well as maintaining a stable foreign exchange rate.
"The most important thing is to restructure State-owned enterprises and adjust industrial development strategy with an eye to better attracting FDI and developing a domestic market," agreed Viet Nam Association of Foreign Invested Enterprises chairman Nguyen Mai.
Businesses have also not taken advantages of free trade agreements with big markets, Mai said.
Minister of Industry and Trade Vu Huy Hoang said that business difficulties were due to both the global economic downturn and shortcomings on the domestic market.
"Many business have also failed to focus on their core lines of business, and have ended up suffering losses in non-core investments," Hoang said.
He said the ministry would push to accelerate projects using State budget funds as well as try to stimulate demand for some items of which there were high inventories.
"We do not have time to wait for solutions," he said. "Measures will be taken to provide for all businesses both domestic and foreign-invested, big or small, in production or trade.
"Businesses are also encouraged to be more proactive in finding their own solutions rather than waiting on support from the Government."
HCM City session
In HCM City, executives from 200 companies and trade groups and provincial industry officials also gathered at a similar meeting on Wednesday.
Most agreed that a funds shortage and high interest rates were the biggest problems.
Quach To Dung, deputy director of the HCM City Department of Industry and Trade, said most companies were unable to borrow from banks because they cannot meet their conditions.
To resolve the problem, attendees suggested setting up a team to go into issues related to loans and interest rates.
They also proposed that the Government cut the rates from the current 15 per cent to 5-7 per cent.
In an action plan that the ministry was drafting to help industry clear inventories and revive production, they wanted it to incorporate measures to provide businesses short – and medium-term loans for buying machinery and technologies.
The business executives listed several problems they faced – like tax refunds, high import-export tariffs, and counterfeits – and possible solutions for them.
Admitting the problems had to be addressed urgently, Minister of Industry and Trade Vu Huy Hoang promised that the solution would be incorporated in the action plan.
"The action plan aims to reduce inventories, help companies get loans, and reduce bankruptcies," Hoang said, adding that it would help companies achieve stability and the year's targets. — VNS