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Banks urged to invest in Delta region development

Update: November, 27/2013 - 08:44
Representatives from Agribank sign loan commitments with Vinafood II and Go Dang Joint Stock Company as Deputy Prime Minister Vu Van Ninh and other leaders watch. — VNS Photo Van Dat

VINH LONG (VNS)— The Cuu Long (Mekong) Delta, which contributes up to 90 per cent of rice exports of Viet Nam, needs better access to bank credit if it is to develop economically and meet its potential, a forum heard yesterday.

Although most of the country's food is produced in the delta, living conditions as well as economic growth in the region are still limited.

Speakers at the Cuu Long (Mekong) Delta Economic Co-operation Forum agreed that the banking system should invest more in the region.

Nguyen Van Diep, chairman of Vinh Long Province's People's Committee, said that several enterprises in Vinh Long had to sell part of their assets to pay debts.

Last year, 142 enterprises had to close their businesses, 40 more than in 2011. During the first nine months of this year, 53 enterprises in the province had to suspend operations due to financial problems, he added.

As of August, the province has 919 enterprises facing debts of over VND7 trillion. Diep revealed that only 27 per cent of enterprises in the locality could access bank loans.

Despite efforts from local governments and banks in the region, only 77 per cent of enterprises' capital demand has been met.

This does not bode well for the region's targetted GDP growth of 12 – 13 per cent between 2011 and 2020.

It also targets having per capita income of US$3,200 by 2020. With such goals, the delta needs a large infusion of capital, speakers said.

During the forum, several investors in agriculture signed loan commitments with banks.

The Bank of Agriculture and Rural Development said it would provide capital of VND1.5 trillion ($71.42 million) to the Viet Nam Southern Food Corporation (Vinafood II). The bank also committed to a loan package of VND100 billion to Go Dang Joint Stock Company.

As of September 30, Agribank has provided about VND90 trillion ($4.28 billion), contributing 30 per cent of loans in the delta.

Banks have released VND301 trillion ($14.33 billion) in the delta as of August, according to the State Bank of Viet Nam.

According to Dao Minh Tu, vice governor of the State Bank of Viet Nam, bank loans with preferential rates would help strengthen social welfare.

"The State Bank of Viet Nam is steering local banks to gradually reduce the interest rate to support enterprises and stimulate production," he said.

"Commercial banks will increase loans for agricultural production to create favourable conditions for farmers."

As of October, mobilised funds in Cuu Long (Mekong) Delta provinces totalled VND230 trillion ($10.95 billion), a growth rate of 9 per cent, Tu said, adding that the loans would help promote fishing activities in the delta, and improve social welfare and poverty reduction in the region.

According to Tu, by the end of October, the Social Policies Bank had provided a VND20 trillion ($952 million) as loans to residents in the Cuu Long (Mekong) Delta, helping people to improve production.

The banking sector will continue to invest in huge projects, including seaports, in the delta.

Banks, as of October, had committed capital of VND28 trillion ($1.34 billion) for seven large-scaled projects.

During the conference, banks also signed commitments to support delta enterprises with VND31 trillion ($1.47 billion) of capital for rice, fish processing, cattle feed factories and others.

"Cuu Long (Mekong) Delta has vast potential so the State Bank of Viet Nam wants to offer help," Tu said. — VNS

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