The banks’ tightened credit policy as required by the government to curb inflation has left businesses no choice but to borrow from illegal credit sources at exorbitant rates in order to maintain production, a conference heard on Friday.
Speaking at the conference on the macro-economy stabilization held by the Vietnam Young Business Association, many enterprises said the inflated lending rates from the illegal credit lenders have slapped negative impacts on their production.
Tran Xuan Mai, chairman of Nam Dinh-based bamboo, rattan production exporter Thinh Nam JSC, said the bank his company had borrowed from has abruptly ended their lending when the company was badly in need of capital for its US$8 million exporting contract.
“To keep the contract, I had to suffer the rates of 108 percent a year from an illegal credit lender,” he lamented.
The representative of the Kon Tum Young Business Association said the banks’ tightening on their loans has enabled illegal credit lenders to mushroom in provinces throughout the country.
Vo Quoc Thang, chairman of Vietnam Young Business Association, said the tightening policy on credit for non-production sector (mainly real estate, personal consumes and securities) is spreading negative impacts on as many as 200 industries in the production sector.
Those include manufacturers in the fields of glasses, cements, bricks, and wood.
“Many factories have to cut production, or even shut down, and a lot of workers have lost their job,” he said.
Thang suggested the current credit policies be amended; otherwise no businesses could survive with the astronomical rates from illegal credit lenders.
Many companies said the government was too strict in tightening the credit growth.
In April, the State Bank of Vietnam instructed that all commercial banks must keep credit growth below 20 percent in an effort to curb inflation.
But in the first six months of this year, the total credit growth is only 7 percent.
Many enterprises demanded more flexibility from the credit policies, saying that the government should employ market instruments instead of administration policies.
Phan Dinh Tue, deputy chairman of Dak Lak Young Business Association, suggested that the central bank lift the credit ceiling on certain qualified banks to enable effective enterprises to access bank loans to maintain production.
“The central bank should also monitor the banks’ lending, to make sure that loans will go to the production and export sectors,” he said.
Enterprises benefit nothing from income tax exemption
Besides suffering the skyrocketing lending rates from illegal sources, Ho Minh Hoang, CEO of Deo Ca Corporation, said many companies also benefit nothing from the government’s enterprise income tax exemption.
“Some companies have incurred losses in two consecutive years and will have no income to be taxed or exempted,” he said.
He thus suggested the government support enterprises by deferring their value added taxes without charging interest rates on them.
The money saved from the deferred VAT tax will be used to clear bank’s interests, he said.