Transactions take place at a branch of Agribank in Gia Lai. Interest rates should be cut further as most businesses in the area are small and rely heavily on bank loans. — VNA/VNS Photo Sy Huynh

GIA LAI (VNS) — The State Bank of Viet Nam (SBV) and four other commercial banks have pledged to expand credit activities in the Central Highlands region, Dao Minh Tu1, SBV deputy governor has said.

Speaking at a meeting held yesterday in Pleiku City in the Central Highlands province of Gia Lai,Tu said that VietinBank, Vietcombank, BIDV and Agribank would offer loans to investors in agriculture, forestry, tourism, minerals and hydro-power projects.

In addition, loans would be given to projects involving long-term industrial trees and plants, such as coffee, pepper and rubber.

Preferential interest rates on bank loans would also be extended to residents in the region in an aim to reduce poverty rates, Tu added.

State banking leaders and representatives from 50 businesses across the country also took part in the meeting.

The event was part of the second investment promotion conference for the Central Highlands region that opens today in Pleiku City.

Many business representatives present at the pre-conference meeting yesterday said that interest rates should be cut further, as most of the businesses in the area were small-sized and relied heavily on bank loans.

Nguyen Tuan, secretary general of Gia Lai Business Association, explained that most companies in the region needed to maintain cash flow to have capital to maintain business operations.

As a result, many farmers preferred making one payment at the end of the loan term rather than every month. This would free up capital that could be used for crop cultivation, Tuan added.

According to Tuan, all businesses, especially small- and medium-sized, want to have a lower interest rate on loans, while depositors want to have a higher interest rate on deposits.

The Government and SBV, he said, were ensuring that policies work well for both businesses and depositors.

"Interest rates fell six times last year, and several times this year they have been at 7.5 per cent. I'm sure this trend will continue if the CPI falls or remains unchanged," he said.

As of last year, the Bank of Social Welfare had nearly 20 credit programmes with total credit balance of VND11.664 billion (US$560 million), an increase of nearly 20 per cent compared to 2011.

Nearly 260,000 people had access to these low-interest loans. The loans have helped lift 41,703 people out of poverty. More than 81,600 children of poor families received loans for schooling purposes.

In addition, the loans helped build 143,000 environmental works in rural areas and more than 54,000 houses for poor families and families that contributed to the country during wartime.

More than 1,700 members of these families also have access to loans to enable them to work as guest workers abroad, according to Nguyen Viet Manh, head of the SBV's credit department.

The SBV plans to expand low-interest credit and welfare credit programmes in an aim to increase the quality of life of residents, especially ethnic minorities, and to protect the environment and cope with climate change.

According to statistics from SBV, as of the end of last year, total credit balance in the Central Highlands region reached VND104.483 trillion ($5 billion), a year-on-year increase of 13.46 per cent. — VNS