A worker stands at a production line of Saigon Paper Corporation
Photo: Tuoi Tre
Though now over a month since the State Bank of Vietnam loosened the tightened credit valves of certain industries, and lowered the lending rate cap for four preferential sectors, accessing new sources of capital at low rates is still far from some businesses’ reach.
Businesses, even those operating in the four preferential sectors now enjoying the low lending rate of 14 percent a year, are still struggling to clear old loans they borrowed at exorbitant rates years ago, and are thus failing to develop new business projects to access the cheaper loans.
Meanwhile, banks repeatedly reject other borrowers, such as the Saigon Paper Corporation, in attempts to restructure their debts, or apply lowered rates on their old loans.
“Our creditors said they are yet unable to tell us whether we can enjoy lower interest rates for our old loans,” Saigon Paper chairman Cao Tien Vi told Tuoi Tre.
Saigon Paper invested the huge sum of VND2 trillion (US$96 million) on its paper manufacturing plant My Xuan 2 in 2007, when the lending interest rate was only 12 percent a year.
“But over the last three years, rates have skyrocketed to 22 percent, and, at times, even 24 percent,” lamented Vi.
“While we had to pay only VND45 billion in interest in 2009, interest clearances in 2010 and 2011 were VND60 billion, and VND80 billion, respectively.
"And this year, the figure is expected to be as massive as VND200 billion.”
Meanwhile, T., the director of a mechanical company in District 6, said that although his business is eligible to access a loan at the preferential rate of 14 percent a year, he has yet to consider borrowing the loan.
“As I have already been burdened by the old debt, how could I dare to get a new one?” he said.
“What’s the point of borrowing loans at this time of troubled production?”
T’s company currently has to set aside VND60 million a month on interest clearance for the VND4-billion loan borrowed in 2010.
“There are now only 20 workers left and the facility is likely to shut down operations soon,” he said sadly.
Tougher spot for realty firms
Many real-estate businesses said they are in even a tougher situation, as no preferential lending rate is intended for the sector.
“There is no door for realty firms to access loans at 12 – 15 percent a year,” said Truong Minh Dat, deputy CEO of Khang Nam Co.
“Even when the cheap loans are accessible, properties’ businesses will also stay away from them as they have yet to settle their old debts, while there are no good signs on the frozen market.”
Dat added that although the credit valve on house-buyers was loosened, no customers will take out loans to buy houses as lending rates are still high.
“Thus, even when their financial states allow, realty firms will hesitate to complete their projects since it will be hard to recoup investments due to poor consumption,” he said.
Meanwhile, Le Tan Hoa, CEO of Lilama – SHB JSC, said his company is still unable to access loans needed to complete some projects in HCMC.
“Borrowers are required to develop a solution to settle old liabilities before they can access the new ones, while we are already struggling to clear the old debts,” he explained.
For his part, Nguyen Vu Bao Hoang, deputy CEO of Thu Duc Housing Development JSC, complained that many banks have turned down his proposal to apply the current lending rates to his old debts.
“Banks said they have had to mobilize deposits at high rates, and thus cannot set a lower rate on our loans.”
