Governor explains why new SME businesses account for 20% of total outstanding debt in the entire economy

On the morning of May 31, in Hanoi, Prime Minister Pham Minh Chinh chaired a dialogue with businesses and business associations to effectively implement Resolution 68-NQ/TW of the Politburo on private economic development. Governor of the State Bank of Vietnam Nguyen Thi Hong attended and delivered a speech on monetary policy management and banking operations.

According to the Governor, if in the past, outstanding credit in the state-owned enterprise sector accounted for the majority, now outstanding credit for the private sector accounts for 92-93% of the total outstanding credit of the entire economy . This figure reflects the development of the private economic sector and also reflects the efforts of the banking system.

According to the report of the Ministry of Finance , the reality is that small and medium enterprises (SMEs) account for nearly 98% of the number of enterprises, but only access less than 20% of the total outstanding credit balance of the whole system; the report also mentioned that the private economy is large but not strong, enterprises are small and micro-sized, competitiveness, operational efficiency, management skills are limited, labor productivity is low, and business information is not transparent. Referring to this report, the Governor said that this is the reason why enterprises find it difficult to prove that they borrow from banks, but whether they are able to repay the debt or not.

“I am very much in agreement with the experts’ opinion that there must be efforts from businesses. We will continue to direct units in the industry to accompany businesses and also hope that the Government will pay attention to directing the implementation of solutions, so that the policy of guaranteeing loans for businesses is more substantial and develops other segments of the financial market. Only then will credit for small and medium-sized enterprises increase, credit turnover to the banking system will increase and credit capital will reach more businesses,” the Governor expressed.

Regarding interest rates, the State Bank said that recently, even when world interest rates increased, the banking industry tried to manage and regulate to continuously reduce the lending interest rate level. Credit institutions in the system were very responsible and humane in reducing interest rates to remove difficulties for businesses and people. The total support amounted to 60,000 - 70,000 billion VND.

Some credit packages such as aquaculture, home loans for low-income people, etc. are all financial resources of credit institutions, not from the budget.

In fact, some businesses report that they spend a lot of money and time on procedures for investment, production and business, and that this process often takes a long time. The State Bank believes that this is also the reason why some businesses complain about high interest rates.

The Governor expects that with the streamlining of the apparatus and amendments to laws such as the Investment Law, Bidding Law, etc. that the Government is implementing according to the Party and State's policies, procedures will certainly be shortened, helping capital turnover faster and businesses will have access, making it more convenient for banks to reduce interest rates.

It can be said that credit and interest rates are always issues that businesses are concerned about at all times. The role of the State Bank , in addition to managing loans from credit institutions, is also to operate monetary policy to contribute to controlling inflation, stabilizing the macro economy, and stabilizing the money and foreign exchange markets.

“This is a very difficult and stressful task, as our economy is highly open, unpredictable and complex. However, for many years, the State Bank has tried to manage to contribute to stabilizing the foreign exchange market, controlling inflation and stabilizing the macro economy. This is extremely important for the business environment of enterprises because if the macro economy is unstable, enterprises will face many difficulties,” Governor Nguyen Thi Hong explained.

Source: https://baodautu.vn/thong-doc-ly-giai-nguyen-nhan-doanh-nghiep-sme-moi-chiem-20-tong-du-no-toan-nen-kinh-te-d293629.html