"Outstanding loans for SMEs account for over 21 per cent of the total lending in the economy, with nearly 70 per cent being short-term loans" said SME Management Science Institute Pham Ngoc Long. — Photo zing.vn

HA NOI (Biz Hub) — Around 33 per cent of domestic small and medium-sized enterprises (SMEs) can't access commercial bank loans, the local press reported, citing SME Management Science Institute Pham Ngoc Long.

Long stated this at a forum fostering cooperation between African banks and ASEAN nations in HCM City on Wednesday, adding that 35 per cent of SMEs often face difficulties seeking credits, and only 32 per cent can get loans regularly.

For firms approaching other capital sources such as policy banks and price stabilisation funds, the ratios are 21 per cent, 30.4 per cent and 48.6 per cent, respectively.

These businesses also lack standing and other necessary conditions required to issue shares or bonds to directly mobilise capital from the market.

According to Long, outstanding loans for SMEs account for over 21 per cent of the total lending in the economy, with nearly 70 per cent being short-term loans.

The ratio of total mortgage value on total loan value had reached 161 per cent in 2011, 164 per cent in 2012, and 178 per cent in 2013. This shows low confidence of banks with SMEs, which are resulting in stricter credit conditions.

As the values of real estate mortgages have declined 20 to 50 per cent, banks often have to demand mortgage supplements, and the SMEs say this is an extremely tough condition for them to fulfil.

Long said, while the SME sector represents 97.5 per cent of the total number of companies operating in Viet Nam, banks are overly cautious in giving them credit. Interest rates have declined over the last few years but were still high when compared with the profitability of companies.

As the firms play an important role in generating jobs and incomes, they need support from the authorities while dealing with queries related to the market, land-use, technology, human resource training and the business environment.

Banks should study new ways of lending, such as financing key enterprises which link different processes, from research, production, processing to consumption, he said. — VNS