THURSDAY, March 28, 2024
nationthailand

Vietnam state-owned and private firms report higher credit

Vietnam state-owned and private firms report higher credit

HO CHI MINH CITY - Credit for Vietnam's state-owned enterprises (SOEs) currently accounts for roughly 15-17 per cent of total outstanding loans, deputy governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong said.

Previously, credit for SOEs was relatively high, but now, credit for private enterprises has increased significantly, Hong said, adding that the central bank has always targeted credit for production and business operations, especially in the government’s prioritised industries such as agricultural and rural development, exports, support industries, small- and medium-sized firms and high-tech enterprises.
 
However, she admitted that the capital market is under development to help enterprises with their long-term capital mobilisation requirements as the market was unbalanced due to the dependence on bank credit.
 
Hong said the government was very interested in the development of the financial market, including the monetary market, to create numerous channels to generate capital for enterprises.
 
Deputy Prime Minister Vuong Dinh Hue recently also instructed the SBV and relevant ministries to develop the financial market to a healthy level and diversify enterprises’ capital mobilisation channels, she said.
 
Hong made the move as representatives from the private sector at a recent forum to support the sector said it was facing many difficulties, where the greatest challenge was access to capital.
 
According to the representatives, while the private sector needs capital from many investors and numerous capital mobilisation channels, Vietnam’s financial market is unbalanced as most of the capital for enterprises comes from commercial banks. The capital source, with typically short tenures and volatile interest rates, in addition to asset mortgage requirements, often has a significant effect on the enterprises’ long-term business and development strategies as well as their capital mobilisation costs.
 
Meanwhile, capital funding from the securities market accounts for some 30 per cent of overall funding sources.
 
According to the representatives, the total outstanding loans are worth more than 200 billion dong (US$8.88 million), and the capitalisation value of the securities market is worth roughly $60 billion. However, the corporate bonds market is only worth roughly $1.3 billion due to a shortage of large investors and the introduction of poor financial products. 
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