SMEs contribute 40 per cent to Viet Nam's gross domestic product and create 50 per cent of the jobs in the economy. — VNA/VNS Photo Tran Viet

HCM CITY (Biz Hub) — Small- and medium-sized enterprises (SMEs) are struggling to get bank credit, a big drawback at a time when the ASEAN Economic Community has come into being and many free trade agreements are in the works, a conference heard in HCM City on January 13.

Speaking at the conference, which discussed among other things providing unsecured loans to SMEs, Tran Ngoc Liem, deputy director of the Viet Nam Chamber of Commerce and Industry's HCM City chapter, said small businesses face many difficulties in borrowing from banks.

Despite a myriad of support policies from the Government and banks, only 30 per cent of SMEs are able to regularly borrow from banks, he said.

The others use their own funds or borrow from other sources at high interest rates, he said.

He blamed this on the tough demands imposed by banks with regard to mortgage, financial capability and steady operation.

Do Tan Duc, head of the SME support department under the Credit Guarantee Fund for SMEs, said banks are trying hard to reduce bad debts meaning more and stringent conditions would come into effect.

Many experts attending the conference agreed that there would also be many other challenges for SMEs in 2016 like the devaluation of the dong and trade deficit.

They feared this would cause more and more SMEs to go bust.

Liem said banks and SMEs have to sit down together to find solutions to help the latter amid the country's rapid and deep integration into the regional and global markets.

SMEs contribute 40 per cent to Viet Nam's gross domestic product and create 50 per cent of the jobs in the economy.

At the conference, authorities also counselled SMEs on how to get loans and apprised them about the city's various programmes to hook up banks and SMEs.

SMEs account for nearly 97 per cent of the 800,000 companies in the country. — VNS