HANOI: In a move to ease businesses’ access to loans, the Ministry of Finance this week cut interest rates on State investment and export credit. According to the ministry’s newly issued Circular 76/2015/TT-BTC, effective from May 19, 2015, interest rate on State investment credit has been cut by 1.05 per cent to 8.55 per cent per year, while interest rate on State export credit has been reduced by 0.3 per cent to 6.9 per cent per year.
The interest rates, which stood at 12 per cent in 2012, have been adjusted down consecutively for the past three years.
The circular replaces Circular 189/2014/TT-BTC, dated December 11, 2014, on interest rates on State investment credit, export credit, and interest rate difference calculated for after-investment support. However, businesses said that only a few firms qualified for the low interest rates while many others had to continue paying high interest rates on bank loans.
They noted that interest rates commonly applied to businesses currently remained too high, averaging at 8-8.5 per cent for short-term loans and 10-11 per cent for long-term loans, causing them difficulty in the context of several power and petrol price hikes as well as the recent devaluation of the dong.
Director of a company, who declined to be named, said that late last year, his company had expected to break even this year by borrowing bank loans to procure modern equipment.
However, he said, his company failed to meet its target and continuously made losses this year because of several consecutive power and petrol price hikes in the early months of this year, while medium- and long-term interest rates did not decrease much and remained high at 11 per cent.
He remarked that although petrol price this year surged by VND4,800 per litre and electricity costs rose 7.5 per cent, his company did not increase its sale prices for fear of losing customers.
Businesses said that lending rates in Viet Nam had remained too high when compared with inflation and other regional countries. Inflation in April did not increase and index for the entire year was estimated roughly at 3 per cent, they added.
Vietnamese firms can successfully compete against other countries if the interest rate remains roughly at 7 per cent on short-term loans and 9 per cent on long-term loans, they said. However, a representative of Asia Commercial Bank said that the rate of 11 per cent was mainly applicable to non-production borrowers. State-owned commercial banks currently lend at 9 per cent per year.
