Hanoi (VNA) - Small-sized enterprises are concerned that they would have to borrow fromcredit institutions at higher rates when new lending regulations take effectnext month.

Undera circular issued by the State Bank of Vietnam (SBV), which comes into effecton March 15, lending rates applied by credit institutions will be fullyfloated, except in five special fields: agriculture and rural development,high-tech industry, export, small- and medium-sized enterprises, and supportingindustries.

Thelending interest rates of bank loans will be based on agreements between the creditinstitutions and customers, the circular said, and the SBV will remove theavailable lending rate cap stipulated under the Civil Code of 2015, which set amaximum lending rate of 20 percent "unless otherwise specified by otherrelevant laws."

Thenew circular, which replaces a 2001 decision, is expected to develop thecountry’s lending activities in accordance with international practices,besides improving their transparency.

Expertshave so far hailed the new regulation, saying that it will help the country’slending meet the requirements of a market economy as the lending activitieswill mainly depend on market demand and supply, and the credit worthiness ofcustomers.

However,some firms, especially small ones, are so far concerned that they will have toborrow bank loans at higher rates.

Thoughagreeing that the new regulation is in accordance with market mechanism,director of a logistic firm, who declined to be named, said that he wasconcerned about his firm’s loans next time, as it would be hard for his firm tobe able to compete against large firms who have better credit worthiness.

NguyenBang Tam, chair of the enterprises group at HCM City’s Binh Thanh district,which is home to many SMEs, told Dien dan doanh nghiep (Enterprises Forum)newspaper that the removal of lending cap was in accordance with the marketmechanism; however, it might cause unfair access to bank loans for small-sizedfirms, as they have to compete with large firms. 

However,Tam have also urged firms to take measures to build up their firms better to beable to get bank loans at the most reasonable rates.

Vice Chairman of the Vietnam Pepper Association Phan Minh Thong said that one of thesolutions was to focus on building the financial reports of firms, which shouldbe audited by prestigious organisations to be able to get bank loans atreasonable rates.

Creditinstitutions often give high grades and credit worthiness to firms withfinancial reports audited by prestigious organisations, Thong said, adding thatthe firms therefore would likely get their loans at good interest rates.

Representativesof the Small- and Medium-sized Enterprises Association said that with theregulation, firms can consider mobilising capital from securities market if theinterest rate is too high.

Financialexpert Nguyen Tri Hieu said that Vietnam needs to further develop the bondmarket to help firms mobilise medium- and long-term capital sources, instead offocusing only on bank loans.-VNA