Workers arrange products at Hai Yen Ltd Co in Lao Cai Province's Bac Duyen Hai Industrial Zone. A recent survey shows that only 32 per cent of SMEs have found access to regular loans. — VNA/VNS Photo Tran Viet

HA NOI (Biz Hub) — Only 30 per cent of small- and medium-sized enterprises (SMEs) have access to bank loans while the rest have to use their own capital or borrow from other sources at high interest rates.

These figures were released at a conference on improving SMEs' access to loans in the context of ASEAN Economic Community integration in 2015 held here yesterday.

K. Balasingam, general director of the Institute of Manpower, Banking and Finance (BTCI), said Vietnamese SMEs were facing numerous challenges such as the long-term decline in consumption demand, and this had led several businesses to stop their operations. In addition, they had a hard time accessing bank loans.

He added that SMEs made up a majority in the Vietnamese business community.

SMEs have played a vital role in the economy in providing jobs, increasing income and mobilising resources for investment in development and poverty reduction. The sector has created around 500 new jobs and contributed 40 per cent to the country's GDP.

Pham Ngoc Long, director of the Science Institute for SMEs Management (SISME), agreed, saying the country had 500,000 SMEs, accounting for 97 per cent of the total number of companies in Viet Nam. Their total registered capital was estimated at US$121 billion, making up 30 per cent of the total.

Long said private companies in general and SMEs in particular have remained small in scale because of low competitiveness and an unfair business environment.

It was for this reason that the companies should receive support from the Government to access loans, he added.

Long noted that SMEs found it hard to access credit because of three factors: increasing bad debt rate, low rate of loan guarantees and slow debt restructuring.

A recent SISME survey showed that only 32 per cent of SMEs had access to regular loans while 35 per cent had a hard time accessing loans, and the remainder had no access.

It was also difficult for SMEs to mobilise capital through the issuance of bonds or shares due to a lack of prestige.

At the end of the first quarter of 2014, SMEs' total debt balance accounted for 25 per cent or VND896.8 trillion ($42.70 billion).

He suggested that the Government provide support in the form of markets, land, preferential loans and technology, as well as training and management.

The country should also renew access methods for credit and credit guarantee activities.

Tran Trung Kien, deputy director of the business customer department in the north at Techcombank, said SMEs often lacked medium- and long-term capital with suitable and stable interest rates.

Kien cited low transparency in finance and risks involved in unfeasible business plans as the main reason.

He suggested that SMEs improve the transparency of their financial reports and business activities. — VNS