HCMC – The Government’s Private Economic Development Research Board has proposed the central bank raise credit growth quotas for banks so that they can finance small- and medium-sized enterprises (SMEs) which often find it hard to access bank loans.
As most banks have almost reached their credit growth quotas, credit has been tightened, especially for real estate and manufacturing businesses.
According to the Ministry of Planning and Investment, the first half of 2022 saw a strong surge in the number of newly established and reopened businesses, with over 76,000 new enterprises and over 40,000 companies returning to operation.
The increase signals a recovery in the private economic sector, which should be supported to survive and grow. However, the sector is finding it difficult to access loans as their collateral is low in value, as most of them are startups; their income is unstable; and banks have reached their designated credit growth.
As 95% of the companies in business are household and small- and medium-sized enterprises, if not supported, they could go bust.
“Thus, taking measures to curb inflation and granting banks more credit quotas are at the top of the agenda for the time being. If not, businesses will go bankrupt and thus cause an economic recession, which is far worse than inflation,” said Truong Gia Binh, head of the board.
Meanwhile, the current global financial conditions and disruption to supply chains are an unwelcome development for the world economy, thereby reducing the country’s export demand to foreign markets.
Besides, a stronger Vietnamese dong has pushed companies which export their products to European and Japanese markets into difficulties.
To help businesses overcome difficulties, the board has proposed the Government maintain policies to provide tax, fee and credit support for businesses, and promote the disbursement of financial aid packages.
It also proposed the central bank lift credit growth quotas for commercial banks so that the manufacturing and service sectors can apply for a loan.