More than 80% of Dak Nong enterprises have not borrowed from banks.

Corporate debt accounts for more than 14%

According to data from the Dak Nong State Bank Branch, by the end of October 2024, 807 out of a total of 4,700 enterprises borrowed capital from credit institutions in the province.

This means that more than 80% of enterprises in the province have not or will not borrow capital from banks in the province. The total outstanding credit balance for enterprises is nearly 7,446 billion VND, accounting for only 14.8% of the total outstanding debt of the entire economy in Dak Nong.

img_7496(2).jpg — Dak Nong has only 807 enterprises with access to capital at banks in the province.

Assessing this figure, Director of the State Bank of Dak Nong Branch Pham Thanh Tinh said that in reality, credit demand and capital absorption capacity of enterprises have currently decreased sharply.

The reason is due to the general difficulties of the economy. After a long period of economic difficulty, the risk level of customers is assessed higher.

In Dak Nong, most businesses operate in the fields of agriculture , construction, and consumer goods distribution. Production activities depend on the epidemic situation and changes in agricultural product prices on the market.

Once the market fluctuates, the production situation of enterprises will fluctuate, leading to a lack of stability. Not to mention, Dak Nong is stuck in bauxite planning, many projects cannot be implemented. Once new projects do not arise, it will affect lending to the construction industry.

In addition to the difficulties arising from businesses, credit institutions also have limitations. In fact, banks in the area are all branches, so lending conditions and policies must comply with the general criteria of the head office.

“The capital mobilized locally by credit institutions in Dak Nong only meets an average of 41.98% of total outstanding debt. To lend, commercial banks are forced to receive regulated capital from the Central Government, at a rather high cost, affecting the reduction of lending interest rates,” Mr. Tinh emphasized.

h21(1).jpeg — Many banks in Dak Nong still have surplus capital, but credit growth is very slow, especially for business loans.

According to Mr. Tinh, currently, loan capital at credit institutions is always available. Many banks even have surplus capital, but credit growth is very slow.

On the other hand, many local businesses are in a state of capital shortage. However, banks and businesses have not yet found a common voice, so credit growth is quite difficult.

“Banks are also businesses, and the ultimate prerequisite is profit. To lend, they must consider many factors. Meanwhile, the quality of businesses in the area still has many issues to discuss,” Mr. Tinh commented.

In fact, out of a total of 4,700 registered businesses, only about 3,200 currently generate taxes. This is also an issue that requires credit institutions to pay attention when reviewing loans.

Of the total 807 enterprises in Dak Nong that borrowed capital, there were 803 non-state enterprises, with outstanding loans of 7,153 billion VND; 4 state-owned enterprises, with outstanding loans of 293 billion VND. The lending interest rates for corporate customers in Dak Nong mostly fluctuated from 9%/year or less (accounting for 97.38%).

Impact on economic growth

The capital absorption capacity of enterprises is poor, affecting production and business activities. The number of dissolved and temporarily suspended enterprises is increasing. From here, economic growth activities and many other fields will be affected.

According to the Department of Planning and Investment of Dak Nong province, in 2024, the whole province will have about 576 newly established enterprises, an increase of 79.2% over the same period. However, the number of dissolved enterprises also increased equally.

The whole province has 125 dissolved enterprises, an increase of 60% over the same period in 2023; 249 enterprises temporarily suspended operations, an increase of 39% over the same period.

Capital absorption capacity of enterprises in Dak Nong is still weak.

“Increased business dissolution and poor performance will lead to increased unemployment and socio-economic instability. Furthermore, business dissolution will reduce competition in the economy and reduce the motivation for innovation and improvement,” said Tran Dinh Ninh, Director of the Department of Planning and Investment.

According to the Dak Nong Province Business Association, the capital absorption capacity of many businesses in the area is still limited. The main reason is the “health” of the businesses.

Most small and medium-sized enterprises have little or no collateral, so it is very difficult to access loans from credit institutions.

In recent times, the State has implemented preferential interest rate credit packages to support the economy and the business community. However, capital absorption is still modest. The main reason is that preferential loan packages often require quite strict conditions, so businesses are reluctant to access them.

img_1742-2-(1).jpg — Cash flow congestion and businesses' difficulty absorbing capital have affected the economy.

According to the State Bank Branch, in the current context, finding good customers for loans is not easy. Banking enterprises that want to lend do not have the demand due to limited output.

Cash flow congestion and lack of access to capital are common problems for many businesses. Therefore, in addition to solutions and policies from the banking sector, there needs to be coordinated local policies. Through policies, we aim to help remove difficulties for production and business, support and promote growth drivers.

The acceleration of the completion of legal procedures related to investment projects and the enhancement of corporate financial transparency need to be further enhanced. Because this is the basis for banks to approach, appraise, and grant credit to good customers, feasible projects, and legal compliance.

According to data from the State Bank of Dak Nong , as of October 31, credit to the economy reached nearly VND 50,311 billion, an increase of 10.93 % compared to the end of 2023. Of which, short-term debt reached VND 33,073 billion, accounting for 68% of total debt.