Lower interest rates stimulate investment in production

(Baonghean) -The economy continues to weaken, inventories are high. In response to this reality, interest rates have been continuously adjusted down to the lowest level in recent years since the beginning of the year, in order to support businesses in stimulating production and circulation of goods, initially creating positive signals for both banks and businesses.

For a long time, people often talk about business inventories, but in the first months of 2013, another entity with inventories has appeared, which is bank capital. The stagnation of capital at banks has most truly reflected the ability to absorb capital and the production capacity of the economy has been seriously affected. The solution of lowering interest rates to share difficulties with businesses, urge production, stimulate the circulation of goods, and release inventories, is considered a strong move, with the fastest impact on the economy.

At the Nghe An Branch of the Joint Stock Commercial Bank for Investment and Development, since the beginning of March, 9 preferential interest rate packages have been launched for corporate and individual customers. Of which, the package for corporate customers borrowing for a term of less than 3 months, with an interest rate of 7.5%/year, has been disbursed in a short time after implementation. The package for individual customers borrowing for production and business has an interest rate of 9%/year in the first 3 months.

In particular, the corporate loan package with a term of less than 6 months and an interest rate of 8.5%/year has created favorable conditions for many customers to access cheap capital in a suitable time to invest in production, business and capital turnover. Along with preferential interest rate packages, since May 13, 2013, to share difficulties with businesses and households in production and business, the Branch has evaluated and reviewed the outstanding balance of old loans with interest rates higher than 13%/year and adjusted them to a maximum of 13%/year. With a total outstanding debt of nearly 1,000 billion VND, the interest rate above 13%/year has been adjusted to the highest level of 13%/year.

According to Ms. Le Thi Ly - Head of Risk Management Department of Nghe An Joint Stock Commercial Bank for Investment and Development: "The impact of interest rate support packages is very large, creating a strong driving force to promote credit growth in April. In the first three months of the year, the Branch's credit growth was negative, but in April, the Branch's outstanding loans increased by 5% compared to March. This is an opportunity for businesses to take advantage of low-interest loans, actively supporting production and business. On the other hand, some customers have improved their financial situation, so their ratings have increased, and their outstanding loans have increased."

For Agribank Nghe An Branch, the adjustment to reduce lending interest rates has boosted credit growth quite strongly, by early May, outstanding loans increased by about 6.7% compared to the beginning of the year. Capital is mainly invested in the agricultural and rural sectors, lending to farmers for production, crop costs, home repair loans, etc. Agribank Nghe An leaders said that the Branch is actively mobilizing idle capital sources to meet customers' capital needs, while reducing lending interest rates to ease difficulties for businesses and households. However, lending conditions have not been loosened, and are even stricter than before.

The Director of Vietcombank Vinh said: The sharp reduction in interest rates has quickly had a positive effect, the demand for loans has increased, and cheap capital has been poured into the economy. At Vietcombank Vinh, as of mid-May 2013, outstanding loans increased by 12% compared to the beginning of the year, with the cheapest lending rate being 7.5%/year and the highest being 13%/year.

On the business side, Mr. Nguyen Dinh Sinh - Director of Austdoor Nghe An Joint Stock Company excitedly shared: "In previous years, there was a time when our business borrowed capital with an interest rate of approximately 22%/year. Currently, we have access to capital with an interest rate of 11%/year, thus reducing half of the interest cost compared to the time when the interest rate was highest, creating more favorable conditions for businesses to invest in expanding production, and products to compete better in the market. In the current general difficult conditions, our unit still maintains stable production, ensuring jobs and wages for workers".

Rolling door production at Austdoor Nghe An Joint Stock Company.

Ms. Nguyen Thi Loan - Deputy Director of Viet My Company Limited confided: Our company specializes in producing NPK fertilizer and trading, the products mainly serve the rural agricultural market. There was a time when the bank loan interest rate was over 22%/year, while the company often lent fertilizer to people from the beginning of the production season, and only paid at the end of the season (without interest), so it was very difficult for the company. Recently, we borrowed 8.5 billion VND from a joint stock commercial bank, with an interest rate of 10%/year. With a relatively cheap source of capital, the company focused on investing in the production of about 1,000 tons of NPK fertilizer to serve the summer-autumn crop production. Currently, the company's goods have been circulated, and all production is consumed.

Through research among businesses, it is known that the interest rate issue is no longer as tense as in previous years, but the most desirable thing in this period is the consumer market. How to promote product circulation when the market's purchasing power is still stagnant? That is the biggest concern of the manufacturing business sector at present. This barrier is the reason why businesses have not invested heavily in production...

Quynh Lan