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The Standing Deputy Governor of the State Bank of Vietnam (SBV), Dao Minh Tu speaks at the seminar. (Photo: SGGP) |
Although many countries around the world are raising interest rates, the State Bank of Vietnam is lowering interest rates to support people and businesses. There is currently an excess of capital in the economy, so banks are encouraging lending. In the near future, the State Bank will once again reduce interest rates.
At the seminar, many businesses said interest rates remained too high, although many commercial banks had several programs and policies to reduce interest rates for businesses in priority areas.
According to Mr. Nguyen Ngoc Hoa, Chairman of the Ho Chi Minh City Union of Business Association (HUBA), based on a survey by HUBA, key manufacturing industries have all experienced a decline in exports, leading to record low growth in HCMC. The textile and garment industry has seen a decrease in growth while the export of seafood has dropped by 30 percent. The wood industry has fallen by 40 percent, and the real estate sector has frozen, leading to repercussions for the steel and cement industries with a 90 percent freeze. Business activities seem to have stalled.
Mr. Hoa believes that businesses have tried to maintain operations in difficult circumstances. Currently, demand is decreasing, affecting business operations, so businesses do not need to borrow for production and business activities but for survival. Therefore, banks need to have debt rescheduling policies for businesses.
"Businesses need long-term investment capital, but with interest rates above 10 percent, no business dares to borrow, not that banks do not lend," Mr. Hoa stated. Therefore, he recommends that there should be a more comprehensive policy for long-term capital, and interest rates should be reduced to below 10 percent to encourage businesses to borrow.
Additionally, property collateral and valuations should be recalculated. Interest rates need to be lowered and collateral requirements should be made more flexible. Currently, businesses may have land, but the lengthy legal procedures make it difficult to use the land as collateral.
Mr. Dao Minh Tu, the Deputy Governor of the SBV, stated that the goal for 2023 is to maintain currency stability, control inflation, and stabilize the exchange rate. Interest rate policy is a challenging aspect of macroeconomic management, requiring a developed economy and balance between investors and businesses across multiple sectors.
Despite other countries raising interest rates, the SBV has lowered interest rates to support people and businesses. With capital currently in surplus, banks are encouraging lending.
"The State Bank plans to further reduce interest rates soon, which will allow commercial banks to lower their interest rates depending on their financial capacity," stated the Deputy Governor.
Mr. Dao Minh Tu also stressed the importance of extending and postponing debts for businesses, which will be implemented soon. However, the extension and postponement of debts must take into account each specific industry to avoid creating bad debts and destabilizing credit.
