Over half of enterprises don’t want bank loans: survey

Over half of enterprises don’t want bank loans: survey

Over half of responding businesses recently told researchers from the General Statistics Office that they haven’t sought bank loans because they either lack investment or production expansion plans or were turned off by complicated banking procedures and high interest rates.

Despite being opstimistic about the development prospect, firms have been cautious in expanding production to minimize risks. Only 33 percent of firms expect to increase their capital this year. Photo: Ngoc Thang

Most borrowers took loans from state-owned banks, (63.6 percent) followed by local joint-stock banks, individuals and their relatives (29.6 percent) and foreign banks (5.9 percent), according to the survey, which consulted 8,100 domestic and foreign enterprises in Vietnam between March 1 to April 30.

Despite limited capital demand, many firms are optimistic about the possibility of economic recovery in 2014. Up to 75.1 percent of enterprises expect higher prior-tax profit in 2014 over last year. Only 5.8 percent of firms expected their profits to remain unchanged, while 19.1 percent expect lower profits.

Downsizing had slowed; only 10 percent of respondents expected to cut employees this year, compared to the rate of 25.5 percent last year. Some 51.5 percent of firms planned to keep their staff unchanged, and 38.5 percent planned on new hires.

Despite being optimistic about development prospects, the respondents were cautious about expanding production to minimize risks. Only 33 percent of firms expected to increase their capital this year, while 60.8 percent of firms plan to keep it unchanged.

As many as 433 firms, or 5.6 percent of responding businesses closed shop between January and Mach, compared to the rate of 8.4 percent in the same period two years ago. Of the firms ceasing production, 58.7 percent attributed their situation to difficulties in seeking customers for their products.

The World Bank estimates that Vietnam’s GDP will grow 5.4 percent this year, slower than a government target of 5.8 percent, and a seventh straight year of growth below 7 percent.

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