VCCI Chairman Vu Tien Loc: Loans need to be developed specifically for the sector

President of the Chamber of Commerce and Industry of Vietnam (VCCI) Vu Tien Loc.

In your opinion, why are SMEs facing difficulties in accessing capital?

The responsibility lies with both "the three": the state (represented by the State Bank, relevant ministries), banks and financial institutions, and small and medium enterprises. Specifically, on the State side, there are still many legal frameworks that do not really encourage investment. On the side of banks and financial institutions, they are still listless. On the corporate side, the biggest weakness is the lack of transparency in governance where credit institutions cannot have confidence in the business.

Our country has about 670,000 operating enterprises. Of which, SMEs account for about 97%, contributing about 45% of GDP, 31% of total budget revenue and attracting more than 5 million workers. Despite the large contribution, the proportion of SMEs accessing healthy capital is not high.

What is the solution here, sir?

Responsibility belongs to the "three factors", so the solution is also the expansion of the "three factors", The essence of the problem is that the "three factors" need to sit together. The parties need to improve relations, not just the mechanism of application, but must be the symbiosis between banks - enterprises, funds - businesses. Thus, institutional bottlenecks, credit knots and bottlenecks in corporate governance are removed.

Banks must take risks when lending to encourage creativity. Source: Internet.

In my opinion, it is necessary to overcome the shortcomings in which the State needs to reform vigorously on the policy and legal framework, create conditions for lending in the 4.0 era, promote start-ups. At the same time, there is a policy to promote interaction between enterprises and financial institutions. These policies will give businesses more space to grow, to access capital.

On the banks side, more efforts should be made in introducing new lending methods, strong investment-driven lending packages for start-ups and agriculture based on business ideas and business plan. Loans must be flexible, even supportive for startups.

At present, some banks have introduced new product packages, new lending methods that do not rely on collateral, apply information to minimize procedures... Specifically, banks should be directed towards accepting mortgage assets for the business plans and business ideas. And especially, there is a need to encourage supply chain lending.

For example, a bank can lend money based on the crops and livestock of farmers in their own fields. That is based on the business plan, but if the basis is for a factory, it will be difficult for investment in agriculture. In many developed countries, this form has long been used to promote entrepreneurship, stimulating creativity. And in particular, banks must take risks when lending to encourage creativity. This depends on state policy, within the framework of the banking system.

In addition, financial credit institutions, insurance companies need to interact, cover in the direction of supporting SMEs. It is necessary to develop loan packages according to the specificity of the industry, which is also a positive direction for pioneering in the coming time.

The banks will not only be a lender, but will also be a companion to a business, giving information support, training and consultancy on market information and corporate governance. Banks are very advantageous in this because the bank through its operations, will grasp the financial flow of the business.

The reason banks say "no" to a business is because the business lacks transparency in governance, since credit is the belief. Without transparency, trust will be difficult to achieve. Thus, businesses themselves must improve transparency, and give disclosure of information.

Thank you Sir!