On July 25, 2023, in Hanoi, a Seminar titled “Enhancing capital absorption capacity of businesses” was organized by the Banking Times. Deputy Governor Dao Minh Tu of the State Bank of Vietnam (SBV) attended and delivered a keynote speech at the Seminar.
Deputy Governor Dao Minh Tu speaks at the Seminar
Over the past time, the SBV has been paying a lot of attention to the credit management. Beside the strong measures to provide liquidity to the economy, creating low-cost financing resources for the commercial banks, the SBV has also reduced the key interest rates, issued policies to support the recovery of production and business operations, etc. In addition, the credit packages supporting the real estate sector, as well as the recently announced credit package worth VND 15 trillion supporting the forestry and the fisheries sectors, and a series of other support programs have been implemented by the commercial banks, etc. However, those measures are not yet sufficient to promote the credit growth.
Therefore, the SBV Deputy Governor hoped that at this Seminar, the specialists, scientists, associations, commercial banks would discuss to come up with a common assessment of the reasons for the low credit growth, thereby assisting the SBV to develop more measures to promote the credit growth, supporting businesses and the people to absorb credit.
At the Seminar, representatives from several Ministries, authorities, associations, businesses and credit institutions, as well as economists focused on analyzing and discussing the reasons for the low credit growth, with the volume estimated at only VND 12,500 trillion for the first half of 2023, reflecting the difficulties in the capital absorption capacity of the economy.
In the discussion session, Mr. Ketut Ariadi Kusuma, the World Bank Specialist, said that the current slow credit growth is the result from the weak demand in the context of the world economic recession affecting trade activities, the domestic production, resulting in negative impacts on the people’s income and consumption. According to the Chairman of Vietnam Association of Small and Medium Enterprises (VINASME), apart from the objective effects from the market, there is another reason from the fact that the Government’s policies have not yet been consistent, while many businesses could not prove their capacity of repayment, nor their management capabilities, business plans or financial transparency, etc. Therefore, in order to enhance the capital absorption capacity of the businesses, the policy on reducing the interest rates is only one of the measures needed to be implemented.
An overview of the Seminar
Summarizing the comments and recommendations at the Seminar, Deputy Governor Dao Minh Tu pointed out the reasons for the low credit growth from the beginning of the year, which was up by just 4.73% compared to that of the end of 2022, equivalent to only half of the growth rate of the same period of 2022 in the context of unchanged mechanisms and policies. The SBV Deputy Governor mentioned eight difficulties, including a decrease in the international and domestic demand for investment and consumption; the large inventories of goods; the limits of the support policies; the need for further promotion of the communications on policies; difficulties faced by the businesses in many areas, especially in the transparency of the cash flows and the transparency of financial statements; the obstacles in the real estate market and the bond market, etc.
In the coming time, the SBV would still use the monetary tools in a flexible manner to regulate the market; continue to reduce the key interest rates in alignment with the established objectives; continue to strengthen the implementation of the credit programs in support of the consumption promotion policy, and especially the social security policy, etc.
About the orientations for the credit management, the SBV has requested the credit institutions to focus on the key economic sectors, the SMEs and the fields requiring the Government's support; continue to strengthen the administrative reforms; apply technologies in the banking operations; continue to implement the policy on the rescheduling of debt payment and the maintenance of debt groups by the credit institutions and the foreign bank branches in accordance with Circular No. 02/2023/TT-NHNN dated April 23, 2023, and promptly resolve any arising obstacles; accelerate the implementation of the credit packages, etc.
The SBV would continue to closely coordinate with the relevant Ministries and agencies, focusing specially on the continuation of the credit support policies to provide medium and long-term capital resources for infrastructure investment projects, in coordination with the capital for public investment; continue to support the stock market and real estate market; formulate policies to support businesses in transitioning from an export-focused strategy to focusing more on the domestic market, etc.
Le Hang