15:00 | 23/08/2018 Economy
Both businesses and banks are to blame for the credit crunch facing the former, the VCCI says
|A woman walking by a Techcombank office in Hanoi - Photo by AFP|
The Vietnam Chamber of Commerce and Industry (VCCI) says that a survey of 504 businesses in different sectors found that most of them were unable to prove their creditworthiness to banks and other credit institutions.
It said that firms did not have the right human resources to manage the business and lacked financial transparency, making banks deem them a high investment risk.
On the other hand, banks and credit institutions were also part of the problem, with complex, difficult to fulfill procedures, and high interest rates.
VCCI recommended that businesses improve their human resources and transparency of their financial operations to show that they carry low investment risks. Banks and credit institutions, meanwhile, should simplify their procedures and make it easier for firms to access credit, it said.
They should properly assess a business’s development prospects, diversify credit products and come up with appropriate lending modalities.
The VCCI also suggested the government directs ministries to speed up administrative reforms and provide businesses with equal access to resources. It said all stakeholders need to take action because accessing credit was crucial for a business to survive and succeed.
According to the General Statistics Office (GSO), Vietnam had more than 600,000 enterprises by the end of 2017, 95 percent of them small and medium enterprises with annual turnovers of less than VND100 billion (US$4.3 million).
The number of enterprises with turnovers less than VND20 billion makes up over 70 percent of the total number of small and medium enterprises. VCCI statistics show that nearly 60 percent of these micro enterprises did not succeed in getting bank loans in 2016.