The key to solving capital difficulties for businesses

Resolution 35 of the Government is considered the key to solving capital difficulties for many businesses in the current difficult economic context.

Resolution 35 of the Government on supporting and developing enterprises until 2020 was issued with a series of "open" instructions on lending such as: simplifying loan procedures, building loan programs with reasonable interest rates...

Many small and medium-sized enterprises have difficulty accessing capital. (Illustration photo: Internet)

According to a recent survey by Asia Commercial Joint Stock Bank (ACB) in its system, the biggest barrier for customers borrowing capital today is complicated administrative procedures (70%); followed by collateral (50%) and proving the ability to repay the debt (50%).

Mr. Le Thanh Thuy, Director of Tri Cuong Company Limited, said that the time from filing the application to getting the bank to approve the disbursement of a consumer loan often takes several months, with complicated procedures. Banks all require collateral, while interest costs remain a burden for businesses.

According to Mr. Thuy, there are two difficulties in securing assets: first, small and medium-sized enterprises often do not have assets to secure; second, the bank's valuation is often very low compared to the secured assets. Therefore, even if there are assets to secure the loan, the amount of capital that can be borrowed is small.

To resolve difficulties for businesses, the Government recently issued Resolution 35 on supporting and developing businesses until 2020, in which it continues to direct credit institutions to implement a number of solutions to support businesses, especially small and medium-sized enterprises, in accessing credit capital such as: simplifying loan procedures, reducing hassles, ensuring loan safety; improving appraisal capacity to shorten loan processing time; building loan programs with reasonable interest rates... This means that the door to borrowing capital for businesses is also more open.

Mr. Dang Ngoc Duc, Head of the Faculty of Banking and Finance, National Economics University, said: For Vietnam, the majority of enterprises are small and medium-sized enterprises, so removing difficulties to restore and develop small and medium-sized enterprises is a legitimate and understandable desire. I think that commercial banks should have measures to comply with Resolution 35 of the Government. However, enterprises that want to borrow capital must prove to commercial banks that they have the ability and will to repay the bank.

According to economic experts, banks creating favorable conditions for businesses to borrow capital under the direction of Resolution 35 is also an opportunity for banks to increase future profits and promote economic development.

However, whether banks continue to cut down on loan procedures and lower interest rates to support businesses as required by Resolution 35 depends on the businesses themselves. Only when the trust between banks and businesses is confirmed can banks lend to businesses. In addition, quickly handling bad debts to ensure smooth credit flows is also an important factor in providing financial support to businesses, creating conditions for businesses to have more opportunities to develop.

Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management, emphasized: "This Government's term hopes to handle bad debt in a substantial way. To do this, there needs to be a breakthrough in changing the laws to create a debt trading market. And only by handling it through the market and letting the market solve this bad debt problem can we help this financial market operate normally as the blood of the economy. Costs will be reduced, and the economy will not continue to bear the cost of bad debt."

In addition, in order for this Resolution to soon come into practice, administrative reform, creating a favorable business environment and strengthening supervision from inspection and supervision agencies, instead of administrative orders, are necessary.

Dr. Nguyen Xuan Thanh, Director of the Fulbright Economics Teaching Program, commented: "If the economic context allows, continuing to stabilize the macro economy and having low inflation, the liquidity of banks will be stable, bad debts will be resolved decisively, which will facilitate capital support for businesses. If administrative orders are used, it will go against the current orientation of developing market support institutions."

Resolution No. 35 fully demonstrates the new Government’s viewpoints, wishes, and specific solutions to support and develop businesses. However, in reality, there is always a gap between the promulgated policies and their implementation.

Therefore, whether the implementation of this Resolution is feasible and reaches businesses or not depends on the specific actions of relevant ministries, departments and branches. With support from banks and authorities, the business community will have more favorable conditions for development - creating a foundation for sustainable development for the country's economy.

According to VOV