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Posts Tagged ‘SMEs’

Government adopts six-step plan to support SMEs

In Uncategorized on May 8, 2010 at 4:50 pm

Government adopts six-step plan to support SMEs

QĐND – Saturday, May 08, 2010, 22:30 (GMT+7)

The Government has issued a resolution outlining six measures to promote small and medium-sized enterprises (SMEs) development.

These measures include increasing enterprises’ access to capital, clearing obstructions relating to getting space for building production facilities, improving enterprises’ competitiveness, accelerating administrative reforms, and building and consolidating supportive systems.

Cities and provinces have been asked to review and adjust land planning, provide timely compensation and enable site clearance for SME projects, and also consider building industrial parks for SMEs.

Local administrations have been asked to allocate more land for SMEs and do their utmost to help the sector boost production and trade.

Localities have to annually report on land that has been allocated to SMEs and for construction of industrial parks.

In the second quarter, the Ministry of Natural Resources and Environment will issue a new circular to help SMEs with polluting facilities move out of urban and residential areas.

The Government has also asked the State Bank of Vietnam to continue adjusting monetary policies and monitoring credit activities with the aim of providing enough funds for key production and export activities, targeting in particular SME sector.

The Ministry of Planning and Investment (MPI) has been asked to plan a project to set up and run an SME development fund.

The Government has also said it will support SMEs become more competitive by increasing the application of advanced technologies, improving human resources and management, and expanding markets. 

It has required relevant ministries and agencies to solve all difficulties faced by SMEs and enhance information flow relating to the national business registration and tax registration systems. 

The MPI will prepare a project to improve capacity of the agencies in charge of realizing preferential policies for the development of SMEs.

SMEs account for 97 percent of registered enterprises nationwide. They make up 40 percent of the national GDP and employs 50 percent of the labor force.

Source: SGGP


Source: QDND

Negotiable interest puts more pressure on SMEs: experts

In Uncategorized on March 24, 2010 at 6:16 am

Small-and medium-sized enterprises (SMEs) will be hard hit by negotiable interest rates, while commercial banks will reap bigger profits, experts have warned.

The negotiable interest mechanism, which was applied under Circular 07 dated February 26 by the State Bank of Vietnam’s Governor, could endanger the survival of SMEs and damage the economy, experts told SGGP.

“The negotiable interest mechanism is not safe as it does not conform to the Civil Code, which stipulates that interest is controlled by the State Bank of Vietnam’s regulation on the prime rate,” said Dr. Nguyen Van Thuan, head of the Accounting-Finance-Banking Department of the Ho Chi Minh City Open University.

Customers at DongA Bank’s transaction office in HCMC. Experts warn the new negotiable interest policy could hurt SMEs. (Photo: SGGP)

He said the policy was not fair to businesses as only the interest rates on commercial bank loans were negotiable while deposit rates were not, Thuan said.

As such he argued that the policy did not represent interest liberalization in the financial market and should be revised for the sake of SMEs.

SMEs to suffer most

Since the negotiable interest was applied, the actual lending interest rate has increased to 16-18 percent, from the prime rate of 8 percent, while some banks were attracting more deposits by raising deposit interest rates to ensure lending sources, Thuan said.

Le Dat Chi, a financial and stock exchange expert, said he expected big business to take the safe option and invest their money in banks rather than risk it in other areas in the current inflationary climate.

“Meanwhile, SMEs often lack capital and have to apply for loans,” Chi said adding that since the new negotiable rate policy, banks have applied “higher, even too high, interest rates.”

He said, while it had been hard for SMEs to afford loans before, now it would be even harder.

Thuan said SMEs also had extra cost burdens because of the recent hikes in electricity, water and fuels.

Meanwhile, Chi forecast that “this year inflation may reach 10.5 percent and the prime rate may be increased to 9 percent.”

“SMEs usually depend on bank loans for their operation so if they can’t afford high interest loans, their business plans could come to a standstill. If that is the case, what will happen to the economy?” he asked.

What should banks do?

Last year, commercial banks benefited from the Government’s stimulus packages, enjoying increased lending balances in a low risk environment, Thuan said.

Most of the profits from banks’ credit activities have resulted from such packages, he added.

But now, although the negotiable interest mechanism has created a widened gap between input and output interest rates ensuring bank profits, that gap could be dangerous in the long term, he said.

The risk will comes when many businesses, especially SMEs, stop taking out high interest loans, narrowing banks’ output – making their input redundant, he said.

He also referred to the fact that commercial banks recently announced their usable capital reached as much as VND30,000 billion (US$1.58 billion).

If the new policy is not revised, Thuan predicted that banks might soon suffer from increasing bad debts because of the pressure on SMEs.

Source: SGGP Bookmark & Share

Capital to host int’l SMEs trade fair

In Uncategorized on December 1, 2008 at 1:24 pm

HA NOI — The Viet Nam International Trade Fair of Co-operatives and Small-and Medium-Sized Enterprises will take place at the National Exhibition Centre from December 2-6.

The fair offers a good opportunity for Vietnamese co-operatives and trade villages to spotlight their handicraft products and trademarks.

Jointly organised by the Viet Nam Co-operative Alliance and the International Co-operative Alliance Asia&Pacific, the exhibition will feature 393 stalls showcasing products from co-operatives and craft villages from across the country, as well as from the USA, France, Germany, China, Japan and ASEAN countries.

Items on show include handicraft products, garments, consumer goods, industrial and electronic accessories, agricultural products and processed foodstuff, feed and veterinary medicine.

Deputy chairman of the Viet Nam Co-operative Alliance Nguyen Xuan Yen said the fair will also help to raise the position of the collective economy to be in line with the Government’s policy on improving agriculture, rural life and farmers’ welfare.

The event, the first of its kind in Viet Nam, is held on the occasion of the eighth International Co-operative Alliance Asia&Pacific Regional Assembly meeting. —

HCM City to help promote SMEs

In Uncategorized on November 24, 2008 at 1:15 pm

HCM CITY — The city will support small-and medium-sized-enterprises (SMEs) in the coming period with trade fairs and exhibitions that will promote high quality products and services provided by the sector, a senior official has said.

Nguyen Van Lai, director of the HCM City Department of Industry and Trade, said that these events would help the sector get information and find new export markets, business opportunities, potential customers and partners.

Many activities and events organised by the city’s Centre for Investment and Trade Promotion have seen about 70 foreign delegations from 15 foreign countries and 233 businesses visit the city so far this year to explore business and investment opportunities.

HCM City attracted more than US$8 billion in foreign direct investment (FDI) in the first nine months of the year, a sixfold increase over the same period last year, the centre announced at a review meeting held recently.

It began the year with meetings between Government representatives and officials from the Association for American Business in Singapore (Singapore Amcham) to open investment opportunities in the field of infrastructure, including roads, ports, airports and energy.

A recent investment and co-operation forum organised by the centre drew the participation of more than 300 Vietnamese and Spanish businesses.

At these meetings and events, city officials committed to help investors in sorting out site clearance problems and guide them in the implementation of investment procedures.

The centre said it planned to co-operate with the Japan External Trade Organisation (Jetro) in the near future to hold events designed to promote exports and attractFDI. —

SMEs need Government help to survive

In Uncategorized on October 13, 2008 at 12:08 pm

HA NOI — Small and medium-sized enterprises (SMEs) would need greater support from the Government to weather the current economic crisis, said Ha Noi’s Trade and Industry Association yesterday.

Association chairman Vu Duy Thai said SMEs were vital to the country’s socio-economic development, and that as a valuable resource were entitled to capital assistance.

SMEs were having to cope with soaring inflation and capital shortages, said Viet Nam’s Small and Medium-Sized Enterprises chairman Cao Si Kiem, adding that 20 per cent of SMEs would go bankrupt without Government support. The figure released earlier this month by the State Bank was 3.8 per cent, but that was only among SMEs having credit relations with banks.

He also said the Government should streamline administrative procedures and exempt SMEs from import taxes to reduce their tax burden. He said the Government should proceed full steam with the introduction of credit quarantine and insurance funds.

Son Ha International Corp chairman and general director Le Vinh Son agreed that capital shortages and limited corporate governance were the major challenges facing SMEs. —

SMEs welcome rate cuts, increased stability

In Uncategorized on October 7, 2008 at 11:09 am

Customers at Maritime Bank. Reduced interest rates, more flexible lending policies and easier loan terms are helping local companies to stabilise their operations. — VNA/VNS Photo Tran Viet

HCM CITY — Reduced interest rates, more flexible lending policies and easier loan terms are helping local companies, especially small and medium-sized enterprises (SMEs), to stabilise their operations.

“In the latter part of each year, enterprises always need more capital. A cut in the lending rate will help enterprises access capital more easily and reduce capital costs,” said Cao Si Kiem, chairman of the Association for Small and Medium Enterprises.

Nguyen Hoang Vu, deputy director of the Import-Export, Economic Co-operation Joint Stock Company, said that over the last two weeks his company was able to continue borrowing from banks to develop his business because the rates on short-term loans were reduced by 1.3 per cent to 19.5 per cent per year.

The company’s business had been constrained for months because interest rates on loans were too high, Vu said.

Nguyen Tung Duong, deputy director of the GODACO Seafood Company in Tien Giang Province, also said that the company was using bank loans with the rate of 20.2 per cent on the Vietnamese dong, and the rate of 8 per cent on the US dollar as against 8.4 per cent in August.

A series of state-owned commercial banks and joint stock commercial banks have already cut their lending interest rates to between 17.5 and 20 per cent against the current ceiling of 21 per cent.

The Export-Import Commercial Joint Stock Bank (Eximbank) has set aside VND3 trillion (US$180.72 million) for loans with a preferential interest rate of 17.5 per cent to grant SMEs, the lowest rate so far. Lien Viet Bank is also offering an annual lending rate of 18 per cent.

The Bank for Investment and Development of Viet Nam (BIDV), another State-owned bank in Ha Noi, offers SMEs an annual rate of 17.8 per cent, compared to the average lending rate of 18 per cent among commercial banks.

Also from October 1, Bank for Foreign Trade of Viet Nam (Vietcombank) spared VND3 trillion ($180.61 million) for SMEs at an unreleased interest rate. Another state owned bank, Agriculture and Rural Development Bank (Agribank) slashed its ceiling rate on loans provided for regular customers from 20 per cent to 19 per cent and lowered the rate from 20 per cent to 19.5 per cent for other enterprises.

Sai Gon Thuong Tin Joint Stock Commercial Bank (Sacombank) has announced an offer for exporters to set the lending rate of Vietnamese dong at 8.5 per cent per year – equal to the lending rate of the US dollar. In return, these borrowers have to commit to selling US dollars to Sacombank after export.

The Dong A Commercial Joint Stock Bank, or DongA Bank, has, meanwhile, resumed lending to enterprises involved in property projects at 20.4 per cent a year. The bank is lending at 19.2 per cent to enterprises involved in export activities and gives an 18.96 per cent rate to special clients.

In addition to the rate cut, many banks have also relaxed their lending conditions.

Do Minh Toan, deputy general director of the Asia Commercial Joint Stock Bank (ACB), said in the past the bank had provided loans only to enterprises that could make profits account for 15 per cent of their total capital. But now, it was ready to grant loans to any profitable company.

At present, the ACB is giving loans at 18.8 and 18.9 per cent a year to enterprises that have good payment history and/ or are demonstrably operating effectively.

“Cutting lending interest rates will lift difficulties for enterprises, especially for SMEs. However, enterprises should try to increase their equity and to cut input costs to produce a profit of 15 per cent per year, by themselves,” Kiem said.

At the same time, foreign banks in Viet Nam are also offering services for SMEs.

London-based Standard Chartered Bank has been offering special lending services for SMEs for over a year in HCM City and for two months in Ha Noi. Following that trend, Hong Kong and Shanghai Banking Corp (HSBC) has just introduced new services serving SMEs in the local market.

Thomas Tobin, director of HSBC Viet Nam, said the importance of SMEs in the Vietnamese market can not be denied. In many markets where HSBC operates, SMEs account for 97 per cent of the total enterprises and contribute a great deal to Gross Domestic Products (GDP).

Australia and New Zealand Banking Group (ANZ) was also preparing to begin special services for SMEs in Viet Nam, said a representative of ANZ who asked to remain anonymous.

According to independent market watchers, the banks’ moves are of great significance. They would help SMEs to partially settle their current serious capital shortage, thus stimulating them to continue producing and create stable commodity sources for markets at home and abroad.

The Business Development Institute under the Viet Nam Chamber of Commerce and Industry (VCCI) released that most enterprises in all economic sectors were short of money and mainly use banks as the key source of funds.

Of 282 businesses polled in a recent survey, 85.6 per cent needed more capital for the rest of the year. The survey also found that 90.2 per cent of local private enterprises surveyed said they needed to borrow money, with state-owned enterprises accounting for 81.5 per cent and foreign invested companies, 57.7 per cent.

According to statistics of the Credit Department of the State Bank of Viet Nam released this week, 163,673 SMEs, or 50 per cent of total SMEs, now have credit relations with a bank.

Outstanding loans for SMEs have been increasing steadily year after year. Loans to SMEs by many joint-stock banks have accounted for up to 70 per cent of the banks’ outstanding loans; for some state-owned bank branches this figure is as high as 95 per cent of their total outstanding loans.

The total amount of outstanding loans given to SMEs, through July 31, 2008, had reached VND299.47trillion ($18.04 billion), accounting for 27.3 per cent of total outstanding loans in the national economy, an increase of 16.65 per cent compared to 2007 and 70.5 per cent compared to 2006. Of this amount, short-term loans accounted for 73.05 per cent, while medium and long-term loans were 26.95 per cent.

About 23 per cent of SMEs are operating effectively and 73.2 per cent have had average growth. Only 3.8 per cent had recognised capital difficulties. —