Businesses call for lower interest rates

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VietNam News English - 29 month(s) ago 10 readings

Businesses call for lower interest rates

The HCM City People's Committee and local enterprises want the Government to ensure that annual interest rates are between 14 and 15 per cent on loans taken out by enterprises involved in production and trading, and that banks' bad debts are settled soon.

HCM City - based Cho Lon Plastics Co uses modern equipment. The municipal People's Committee is asking the Government to take measures to reduce the burden of high interest rates on businesses. — VNA/VNS Photo Van Khanh
HCM CITY — The HCM City People's Committee and local enterprises want the Government to ensure that annual interest rates are between 14 and 15 per cent on loans taken out by enterprises involved in production and trading, and that banks' bad debts are settled soon.

These suggestions were part of six major measures that the committee submitted to the Government at a meeting on Monday with Deputy Prime Minister Vu Van Ninh.

The measures are expected to help local enterprises survive and develop in a time of prolonged economic turndown.

The committee has said that the State Bank of Viet Nam should find ways to ensure small – and medium-sized enterprises could get access to bank loans at reasonable rates.

But the bank should also strictly control the implementation of deposit and lending interest rates as well as risk management at commercial banks, the committee recommended.

It suggested that the Government reduce corporate taxes by 30 per cent for SMEs and extend or defer their tax payments in 2012.

It also called for the Government to exempt personal taxes for those whose annual income is VND5 million or less, and exempt value-added taxes for some kinds of essential commodities and services.

Another proposal made by the committee at the event targets abrogation of the current time regulation being applied to enterprises that want to re-register. In addition, limitation of imports of unnecessary commodities and adjustments on import tax regulations were also suggested.

Speaking at the event, the People's Committee vice chairwoman, Nguyen Thi Hong, said the city's number of bad debts was increasing rapidly.

She attributed the city's high bad-debt ratio to difficulties that local enterprises, including real-estate developers, have met in production and trading activities.

One of the biggest obstacles for companies was the high lending interest rate, Hong said, adding that the lowest interest rate in the city was 17.3 per cent per annum for short-term loans, and 18.3 per cent for long-term loans.

Tran Quoc Tuan, vice chairman of the HCM City Fine Arts and Wood Processing Association, said although the lending interest rates had dropped, they still remained fairly high and beyond the payment ability of most enterprises.

In addition to interest rate problems, domestic wood manufacturers had had to cope with continuous increases in the prices of input materials together with fluctuations in export markets including the US and EU, all of which have placed another burden on them, according to Tuan.

Do Phuoc Tong, vice chairman of the HCM City Mechanical Engineering Association, said that several current policies and regulations were still improper, thus affecting domestic enterprises' production and trading efficiency.

Citing the mechanical engineering industry as an example, he said the quality of some kinds of domestic mechanical engineering products were better than the quality of similar products made in China.

For his part, Deputy Prime Minister Vu Van Ninh admitted that current lending interest rates were still high relative to enterprises' current difficulties.

Ninh said he would ask the State Bank of Viet Nam to examine the application of both deposit and lending interest rates at banks to ensure proper interest rates for local enterprises.

He also agreed with the People's Committee's proposal to limit imports of unnecessary commodities by creating technical trade barriers. — VNS

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