The HCM City People Committee has decided to give interest rate subsidies for loans for priority projects to bolster the city’s socio-economic growth.

Nguyễn Quang Thanh, deputy director of the HCM City Finance and Investment State-owned Co. (HFIC), said the decision was effective starting July 29.

Accordingly, the loan interest rate subsidy will be given to priority projects in the fields of high-tech and digital transformation initiatives, startups and innovation ventures, commerce and agricultural production services, healthcare, education, vocational training, culture, and sports.

Economic, technical, and environmental infrastructure projects; projects within four key industries (mechanics, electronics-information technology, pharmaceuticals-rubber-plastics, and food processing), and supporting industries are also included.

Depending on the project type, the loan interest rate subsidy can range from 50-100 per cent of the total borrowed amount.

At present, the maximum loan volume for one such project eligible to enjoy the subsidy is VNĐ200 billion (US$7.9 million), excluding deductible value-added tax.

The construction investment capital is supported up to 70 per cent, while the technology and equipment up to 85 per cent.

Projects in the fields of healthcare, education, vocational training, culture, and sports invested by non-profit public-owned units in the city can enjoy interest rate support of 100 per cent for construction and technology-equipment.

In addition, projects for kindergartens and general education by these units can also receive 100 per cent support.

The subsidy period is capped at seven years from the date the project is approved by the municipal People's Committee to the initial loan disbursement by the HFIC.

A 100-per cent interest rate subsidy essentially means the city is providing interest-free loans to businesses for investment purposes.

The seven-year loan term offers significant long-term support.

Businesses in neighbouring countries are usually able to access loan packages with extremely low interest rates of 0-5 per cent from domestic financial organisations.

Meanwhile, domestic enterprises have to endure a rate of 6-12 per cent.

"This new policy is seen as a measure to boost the strength of Vietnamese businesses," Thanh said.

City leaders have emphasised the importance of transparency, clarity, and efficiency in implementing this subsidy programme, he said.

They have instructed relevant agencies to avoid creating additional bureaucratic hurdles for project owners.

HFIC is developing a standardised application procedure, aiming at simplifying the process for businesses to determine if their projects qualify for subsidies and to facilitate the disbursement of funds.

HFIC will assess whether a business's project is eligible for the interest rate subsidy.

Depending on the project's nature, businesses will submit their applications to either the city’s Department of Science and Technology (for projects related to high technology, digital transformation, innovative startups, commerce, agriculture, healthcare, education, culture, and sports, or infrastructure), the city’s Department of Industry and Trade (for projects in the four key industries and supporting industries), or other inter-agency committees established by the municipal People's Committee.

The relevant department will submit the completed application to the municipal People's Committee for approval of the subsidy rate.

Upon approval, HFIC will promptly disburse the funds.

HFIC is collaborating with relevant departments, the Management Board of HCM City Export Processing Zones and Industrial Parks (Hepza), and Sài Gòn Hi-tech Park to ensure that businesses are well-informed of the application process.

These agencies are responsible for disseminating information and providing guidance to eligible businesses located on their sites on how to prepare their applications. — VNS