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Interest rates sky high, businesses feel anxious as Tet nears   2010-10-18 - Tuoi tre

It is now the high production season and businesses hurry to run their production lines to make products for Tet sale. However, a lot of businesses still cannot borrow capital due to overly high interest rates.

High interest rates will not bring profit

Nguyen Huu Phuc, Director of Como Company in HCM City, said he needed two billion dong to import fabric. However, he had to refuse the loans offered by commercial banks because they had overly high interest rates, at 14-16 percent per annum. He said the business would not be able to make profit with such interest rates.

However, Phuc was lucky enough because he finally could borrow two billion dong from a finance company at the interest rate of 13.5 percent per annum.

Han Vinh Quang, Director of An Binh Paper Company in Binh Duong province, complains that the current high lending interest rates of 13.5-14 percent per annum will surely make Vietnamese products less competitive in the world market, because businessmen in other countries only have to pay the interest rates of 4.5-7 percent per annum.

T. the owner of a workshop specializing in making fruit jams in HCM City, said that lenders offer her the interest rate of over 13 percent per annum. The interest rate is lower than previously, but is still relatively high. “We can break even with the interest rate, but we cannot make profit,” she said.

Meanwhile, Le Hai Lieu, Chair of Duc Thanh Woodwork Company, said that businesses do not want to expand production scale due to the high interest rates, adding that the wooden furniture industry will be able to develop only if the lending interest rates are lowered.

According to Do Minh Toan, Deputy General Director of Asia Commercial Bank ACB said, the disbursement rate of the bank has increased by 20 percent over previously, since food, rubber, wooden furniture and seafood producers need money to purchase materials for the production season.

ACB has eased the interest rates by one percent, now lending to export companies at 12.8 percent per annum at the lowest . Meanwhile, normal businesses have to pay 13-13.5 percent, and small businesses 14-14.5 percent per annum

According to Toan, in order to enjoy the preferential interest rate of 12.8 percent, export companies have to commit to sell dollars they earn from export contracts to the bank.

Nguyen Huu Dang, Acting General Director of the HCM City Housing Development Bank, said farm produce exporters can borrow money from the bank at the interest rate lower by 0.5 percent than normal interest rate, at 13.5 percent per annum.

Bankers say they need more time to ease interest rates

According to T, her workshop will be able to make profit if the interest rate is lowered to 10 percent. Meanwhile, Han Vinh Quang said that with the current lending interest rates, businesses dare not expand investment.

In response, bankers say it will take time to ease interest rates. Tran Son Nam, General Director of Dai Tin Bank, said it is still difficult to mobilize capital, therefore, the bank is now focusing on lending to loyal clients.

Bankers also said that the interest rate performance will much depend on the state bank’s policies. If the state bank pumps more capital through the open market operation, the capital will reach out to small banks, thus helping reduce interest rates.

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