SMEs always in disadvantageous position

Thai Ngoc

Employees of a local SME package school bags. High interest rates for bank loans make life hard for local SMEs - PHOTO: THANH HOA

At a meeting on solutions for SME development, organized in HCMC last Friday by the Vietnam Chamber of Commerce and Industry (VCCI), Tran Vinh Du, general director of TNK Capital, said local SMEs are losing on the home market.

The State has a lot of support policies for SMEs but, Du said, those policies have not been working as they still pay high interest rates for bank loans.

Although inflation was less than 2% last year, most SMEs paid an interest rate of over 10%. Du said interest rates in Vietnam are much higher than in other regional countries including Malaysia with 4.9%, China with 6.6% and Thailand with 6.9%.

Interest rates are low in the countries and territories that are investing in Vietnam, such as 1.5% in Japan, 2.9% in Taiwan, 3.3% in the U.S. and 4.7% in South Korea. Therefore, their investors never borrow from Vietnamese banks.

The high interest rates have eaten into the competitiveness of Vietnamese SMEs, Du noted. That is why FDI firms are more competitive than local ones in terms of production and consumption.

SMEs have not been treated on an equal footing with State-owned enterprises since they always find it hard to take out bank loans due to exorbitant interest rates, he said.

While State-owned and FDI firms enjoy a host of policy incentives, local private businesses often have a hard time dealing with authorities.

In Vietnam up to 96% of 495,000 local businesses are small and medium.

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