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Sir, looking back over the years, how do you assess the role of bank credit in the investment and development activities of the state-owned enterprise sector?
It can be said that bank credit plays a very important role for the state-owned enterprise sector. One of the reasons is that this sector's ability to raise capital from other sources is still quite limited.
Unlike private enterprises, the majority of assets in state-owned enterprises (SOEs) are state-owned. Therefore, the value of assets that can be used as collateral for loans is not always as flexible as in the private sector. Meanwhile, many SOEs also have limited internal capital reserves because they must fulfill numerous policy tasks and socio-economic objectives in addition to profit targets.
Furthermore, the amount of capital available for reinvestment from profits after allocating funds is often quite limited. In a context where the state budget cannot provide regular funding to enterprises, bank credit becomes a crucial resource for SOEs to implement investment projects. In addition, the ability of many SOEs to raise capital on the stock market remains limited. While some large corporations have been privatized and listed, the majority of enterprises are either unlisted or have a low privatization rate. Therefore, the stock market as a channel for raising capital has not yet fully played its role.
Similarly, the issuance of corporate bonds by this sector is not as common as by the private sector.
Therefore, in many cases, state-owned enterprises remain quite dependent on bank credit.
How do you view the effectiveness of credit utilization by the state-owned enterprise sector in recent times?
Overall, the credit quality of state-owned enterprises (SOEs) is generally quite good. One reason is that these enterprises mainly operate in relatively stable sectors that play a vital role in the economy, such as energy, aviation, oil and gas, transportation, infrastructure, and telecommunications.
These sectors have stable market demand, relatively low risk, and are often aligned with the nation's long-term development goals. Therefore, the repayment capacity and asset quality of loans to this sector are generally good, with a low non-performing loan ratio.
Furthermore, many state-owned enterprises (SOEs) have relatively well-structured management systems and a workforce with high qualifications and experience in complex technical fields. Therefore, the use of investment capital, especially in large projects, is usually implemented according to fairly strict procedures. From the perspective of contributing to the economy, the SOE sector still plays an important role in many key industries and sectors. Large corporations such as oil and gas, electricity, aviation, and shipping are all linked to the infrastructure and energy development goals of the economy.
These sectors not only have enormous capital requirements but also hold strategic importance for long-term growth. Therefore, investment projects by state-owned enterprises (SOEs) in many cases create significant spillover effects on the development of the economy.
Resolution 79 of the Politburo continues to emphasize the need to improve operational efficiency and promote the leading role of the state-owned enterprise sector. In this context, how should bank capital be directed to both support state-owned enterprises in implementing large-scale projects and ensure efficiency and sustainability?
Resolution 79 does not directly address the issue of bank credit, but mainly emphasizes the role of state-owned enterprises (SOEs) in pioneering in key sectors, especially science and technology and innovation. However, for SOEs to fulfill this role, capital is crucial. Investing in science and technology often involves high risk and long payback periods. Many research and development projects have almost no collateral, while investment results are very difficult to predict.
Therefore, the commercial banking system finds it difficult to fully finance projects of this type. In principle, banks are the primary source of capital for the short- and medium-term needs of the economy. Meanwhile, many infrastructure or technology projects have very long payback periods, sometimes spanning decades.
On the other hand, over-reliance on bank credit to finance such projects will put significant pressure on the financial system. Therefore, in the long term, Vietnam needs to develop stronger medium- and long-term capital mobilization channels, especially the corporate bond market, the stock market, and development investment funds.
As these capital channels become more fully developed, the banking system will be able to focus on areas that align with its functions, and major economic projects will have a more stable and sustainable source of funding.
Returning to Resolution 79, in my opinion, for state-owned enterprises to truly become a pioneering force in science and technology, significant support from the state budget is needed, especially in research activities, technology acquisition, building laboratories or pilot production facilities…
Experience from many countries shows that in the initial stages, the state usually plays a leading role in funding research and development. Only after the technology is developed and commercialized can the business sector and financial system become more deeply involved.
Currently, the state holds controlling stakes in many large banks. In your opinion, what solutions are needed to help these banks improve their financial capacity and continue playing a leading role in providing capital to the economy?
One of the major issues currently is the slow pace of capital increases for state-owned commercial banks. While the scale of credit in the economy is growing, banks need to increase capital to ensure compliance with regulatory safety ratios. In my opinion, the government should establish a clear mechanism allowing state-owned commercial banks to retain a portion of their annual profits to supplement their charter capital. The retention rate could be stipulated on a cyclical basis, for example, every 3-5 years.
This mechanism offers two benefits. Firstly, it incentivizes banks to operate more efficiently to increase profits and equity capital. Secondly, it helps the state budget be more proactive, avoiding the need to request additional funding from the state budget every time it needs to increase capital. With strengthened financial capacity, banks are also better positioned to establish investment funds for lending to the science and technology and innovation sectors, in line with Resolution 79. This supports businesses in increasing investment in science and technology and innovation, contributing to enhanced competitiveness and sustainable economic growth.
Thank you, sir!
Source: https://thoibaonganhang.vn/von-ngan-hang-tru-cot-tai-chinh-cua-dnnn-180552.html
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