BUSINESS FOCUS
your reliable assistant in every business decision
Issue No. 12 - Dec / 2008
Business Focus is an internal information channel of Asia Trust Investment and Management Corporation (ATIM), with aim is to furnish our Clients and business partners with useful and most updated information about changes, tendency and forecast on legal and business environment in Vietnam in different aspects. Business Focus will be released on monthly basis and with a depth study each quarter.
The economy crisis is likely deepen worldwide following the collapse of various giant financial institutions and corporations. Investors and consumers have lost trust in the financial system and are fearful of the future and hesitant in moving forward. Spending for investment and consumption has sharply declined everywhere in the world. Consequently, increasing unemployment and wealth devaluation is making the world crisis become even more serious.
Many countries have reacted to this crisis by appropriating huge
funds to be poured into their sick economies. Various policies have
been enacted aimed at tightening spending, credit, etc. to simulate
economic activity.
We feel one root cause of today’s crisis is the lack of transparency
in both corporate governance and public spending management. If
we are to view this situation as an opportunity to improve future
sustainable growth, we must review, enact and apply strict controls
in these areas to help recover the trust of investors and consumers.
The end of 2008 is coming. We believe that future ahead can still
be bright if we realize what our internal problems are and take this
crisis as the opportunity to achieve even more success in the
coming years. Wishing you the best.
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Notice: Our monthly Business Focus is postponed for upgrading of design and content
LOW RATES BOOST LENDING TO SMALL BUSINESSES
In the wake of the State Bank of Viet Nam’s decision to cut the prime interest rate by 1 percentage point on November 3, a host of banks have cut lending interest rates from 1 per cent to 1.5 per cent. The ceiling rate is now 18 per cent, and the lowest rate about 15 per cent.
Many banks have given their lending priority to capital-strapped small- and medium-sized enterprises, which make a nearly 40 per cent contribution to the national GDP. The Bank for Investment and Development of Viet Nam (BIDV) is offering Small-and-Medium-sized-Enterprises (SMEs) loans with a 15 per cent interest rate, a decrease of up to six per cent compared to earlier this year. Lien Viet Bank has also cut its lending interest rate to 15.5 per cent, down by 1.5 per cent.
Meanwhile, the Agriculture and Rural Development Bank (Agribank) has applied the loan interest rate of 15.5 per cent a year to households in rural areas to help them develop production. Companies involved in export and import of essential products are also able to receive priority loans with rates of 15 per cent and 16 per cent. Some banks are considering granting loans to property investors that have sufficient financial capacity and feasible projects.
With loan rates of 15 and 16 per cent, many companies can get access to bank loans to implement their production and trading plans. This change is of great significance since expanded production would create more jobs and stimulate consumer spending. As a result, deflation could be avoided. Loan interest rate cuts have benefited both companies and banks and other credit organizations. Thanks to several sharp cuts to lending rates, BIDV since August has disbursed nearly VND2 trillion (US$212 million) of the total VND3 trillion that it has planned to lend SMEs. But many SMEs still cannot meet banks’ credit requirements, including using property as collateral. Banks and authorized agencies are seeking ways to help enterprises settle this difficulty.