Lower interest rates: A boost for businesses

(Baonghean) - Currently, interest rates are decreasing, capital is abundant, credit institutions are stepping up lending activities. This is an opportunity for businesses to supplement capital, expand investment, develop production and business at the end of the year.

TIn the field of construction materials production, Austdoor Nghe An Joint Stock Company is under fierce competitive pressure from manufacturers of rolling doors and cheap plastic doors. Moreover, in 2014, the market is still very difficult because large projects are rarely started, so products are difficult to sell. Faced with this reality, Austdoor Nghe An is constantly researching and applying high technology to products, meeting the increasing needs of customers. To do that, investment capital is needed. Austdoor Nghe An is invited by many banks to borrow capital with low interest rates, so it is favorable for investment. In previous years, there was a time when businesses had to borrow capital with an interest rate of approximately 22%/year, now the interest rate is only 8%/year. The low interest rate helps businesses access cheap capital, increasing production and business capacity in the context of the current general difficulties of the economy. Thanks to the advantage of low capital costs, Austdoor Nghe An offers customer care services, free warranty and maintenance programs; and applies high technology to products. Therefore, despite the pressure of market competition, Austdoor products still sell well.

Mr. Tran Duc An - Deputy Director of the company said: “In the first 8 months of the year, the total sales revenue of Austdoor Nghe An reached 35 billion VND, equal to 60% of the yearly plan; consumption output increased by 130% over the same period last year. In the coming time, the company will promote the production of high-end aluminum doors, wooden doors, hydraulic sliding doors, automatic doors... to diversify products, meeting the increasing needs of consumers. The company's current total assets are over 30 billion VND, bank loans are nearly 4 billion VND, interest rate 8%/year. With this interest rate, it greatly supports businesses when they need capital to expand the market, research and develop products, reduce loan costs, motivate businesses to expand production investment, create more jobs for workers."

Similarly, Duc Phong Company Limited is also being sought after by commercial banks for cheap loans. With its main business specializing in producing rattan and bamboo products for export, the company has now grown to directly export to markets such as Germany, the Netherlands, the US, France, Chile, China... In the first 8 months of the year, the total sales revenue was approximately 10 billion VND. Currently, the company is focusing on developing raw material areas in Quy Chau, Que Phong to ensure long-term stable production. Mr. Thai Dai Phong - Director of the company shared: "Currently, bank interest rates have decreased sharply compared to previous years. Interest rates are cheap, banks are abundant in capital, businesses with collateral and good production and business plans will be sought after by banks for loans.

However, the current difficulty is that the consumer market is still limited, purchasing power is slow, so businesses limit investment expansion in production. For our company, we have the advantage of a large and stable export market for many years, so we are only worried about not having enough products to export to partners, because currently the labor force working in rattan and bamboo weaving in localities in the province is gradually decreasing. However, with the current low interest rate, and the bank creating favorable conditions for loans, we see it as a favorable time to expand production scale, planning to borrow an additional 4 billion VND to build a factory and buy raw materials, increase production capacity, and meet the increasingly strict requirements of foreign partners."

Production of rattan and bamboo products for export at Duc Phong Company Limited.

Currently, the lending interest rates of State-owned commercial banks are commonly from 7-9%/year, but the capital demand is not high, especially in July (Lunar calendar). According to Mr. Le Thanh Phong - Deputy Director of Ben Thuy Industrial and Commercial Bank: The current lending interest rate is very preferential for customers, but the demand for loans is still not high. Although, bank staff often approach businesses and business households to invite them to borrow capital. Therefore, in order to boost credit in the last months of the year, the bank is actively implementing preferential loans to compete to attract customers, hoping that in the fourth quarter, the capital absorption capacity of the economy will improve. The lending interest rate of Ben Thuy Industrial and Commercial Bank Branch is currently from 7-9%/year, with outstanding loans of about 1,700 billion VND.

According to the data of the State Bank of Nghe An province, by the end of August 2014, the total mobilized capital in the whole area reached 61,987 billion VND, an increase of 10.5% compared to the beginning of the year. Total outstanding loans reached 104,140 billion VND, an increase of 8.5% compared to the beginning of the year, of which the commercial credit sector reached 74,080 billion VND, an increase of 10.7% compared to the beginning of the year. After the second quarter, the credit growth rate was better. Because credit institutions in the area focused on promoting lending to businesses, at the same time expanding retail lending, production and business lending and consumer lending; focusing on credit capital for production and business sectors, especially priority sectors. Commercial banks stimulated consumer credit, implemented stimulus to push capital into the economy, creating more jobs for workers through the production of goods.

Mr. Cao Song Diep - Head of General Department of Nghe An State Bank Branch said: From the beginning of the year, Nghe An State Bank has set a growth target of 20%; outstanding credit investment increased from 15 - 20%. Currently, outstanding commercial debt increased by nearly 11%. Normally, in the last months of the year, capital demand increases sharply, at the same time, the disbursement progress of projects is accelerated to ensure financial targets. It is estimated that the credit growth target will reach about 15 - 17%, meaning that the plan will still be achieved but at a low level.

Quynh Lan