Support for loans to build new ships: Quickly open up capital sources

(Baonghean) - Decree 67/2014/ND-CP dated July 7, 2014 of the Government on a number of policies for fisheries development, including credit support policies for fishermen when borrowing capital to build new ships and boats for offshore fishing. With large incentive mechanisms, the policy has attracted the attention of many fishermen since its issuance. However, up to now, after more than 4 months of implementation, fishermen still have difficulty accessing capital sources.

Building large capacity fishing boats in Quynh Lap commune (Quynh Luu)

After Decree 67/CP was issued, Nghe An Provincial People's Committee established a Steering Committee and organized training to implement the contents for relevant subjects. Commercial banks have organized to disseminate and disseminate professional procedures to staff and branch leaders of coastal districts. Through implementation, people in 5 coastal districts and towns in the province (Nghi Loc, Dien Chau, Quynh Luu, Cua Lo Town and Hoang Mai Town) have registered to build and upgrade 874 boats, equivalent to a capital of about 4,305 billion VND. Previously, based on the balance of resources and the current fishing situation in Nghe An, the Government allocated the province to build 100 new boats, of which 50 in phase 1 in 2014 and 50 in phase 2 in 2015; in addition, the Government assigned the locality to mobilize other capital sources to support fishermen to upgrade 50 boats....

On October 15, 2014, the Provincial People's Committee issued Decision 5295/QD.UB allocating targets for building new and upgrading fishing vessels and logistics services for offshore fishing in the first phase of 2014. Accordingly, implementing Decree 67, the whole province has 129 vessels (building 75 new fishing vessels and 4 service vessels, upgrading 50 vessels), of which Quynh Luu has the most with 51 vessels, Hoang Mai Town has 41 vessels, Cua Lo Town has 16, Dien Chau has 11 and Nghi Loc has 10 vessels. The province has also issued 9 criteria for selecting ship owners to borrow capital to build new fishing vessels and announced the establishments eligible to build new and upgrade vessels in the area to the Ministry of Agriculture and Rural Development.

The provincial Steering Committee for the implementation of Decree 67 has assigned the State Bank Branch and the People's Committees of districts and towns to unify the issuance of loan documents for building fishing boats according to Decree 67/CP, appraise the list of ship owners supported with loans to submit to the provincial People's Committee for approval... Mr. Tran Huu Tien - Deputy Director of the Department of Agriculture and Rural Development, Deputy Head of the provincial Steering Committee for the implementation of Decree 67/CP said: "Up to this point, there are 5 commercial banks registered to participate in the loan program according to Decree 67/CP, namely Agriculture and Rural Development, Investment and Development (BIDV), Industry and Trade, Foreign Trade and the Mekong Delta Housing Development Bank. Compared to the key provinces prioritized by the Government, with the above implementation steps, Nghe An is one of the localities with active implementation steps, ensuring progress".

However, according to our research, up to now, when Decree 67 has been in effect for 4 months, but because many procedures and documents are not yet complete, banks have not issued any loan documents according to Decree 67; loans, if any, are through the normal mortgage loan route. Mr. Tran Dinh Tho - Owner of a shipbuilding facility in Hop Tien village, Quynh Lap ward, TX. Hoang Mai said: “The workshop has been operating for 5 years, regularly employing 20-30 workers. In addition to repairs, the workshop builds 5-7 new ships each year, with a capacity of 800-1,000 CV. Currently, the workshop is building 3 ships, of which 2 are about to be completed, each costing about 5.5 billion VND, but the ship owners have not yet had the money to pay. A few months ago, I heard that the State had a policy to support loans according to Decree 67. Not only the ship owners but I was very happy and expected that this would be a source of support and help for fishermen to borrow capital and pay shipbuilding facilities to receive ships to go fishing. However, with the rather complicated procedures, we and the fishermen do not know when we will be able to borrow...”.

Mr. Phan Van Hai - Chairman of the Quynh Lap Ward Fisheries Association gave a calculation: In 2013, his family borrowed over 5 billion VND to build a new fishing boat with a capacity of 640 CV, each trip earned an average of 200 million VND to 360 million VND, after deducting expenses, each trip earned about 120 - 150 hundred million VND. Initially, when he received the policy according to Decree 67, he himself also wanted to register to participate. However, after careful research, he learned that in order to borrow capital to build a boat according to Decree 67, fishermen must have counterpart capital of 30% of the value if building a wooden boat and 5% for an iron-hulled boat, so he reconsidered.

According to Mr. Hai, the boats built by fishermen in the area with a capacity of 500-750 CV usually cost from 5-6 billion VND. Now, building boats according to Decree 67, with the same capacity, the price of wooden-hulled boats is estimated at 8-10 billion VND/boat; iron-hulled boats cost from 14-15 billion VND/boat, leading to the counterpart capital "increasing" quite high; 30% of counterpart capital means that fishermen must have from 2-3 billion VND/boat. Except for the first year of exemption, the capital and interest to be paid in the next 10 years is very large... Not only are they concerned about counterpart capital, through research, we also found that fishermen in some areas are still hesitant to build new boats, especially iron-hulled boats, because they have not been familiar with this type of vehicle for a long time and if they build, the construction facilities are far away, making it difficult to supervise.

Some commercial banks are equally concerned. As a bank identified as one of the three pillars of lending according to Decree 67/CP, Mr. Tran Van Duc - Deputy Director of Agribank Nghe An Branch said: “One of the reasons why fishermen are worried is that according to Decree 67, loans are only granted to ship owners who own one person. However, fishermen in Quynh Luu, Hoang Mai Town have very few ships owned by one person. Although in terms of economic conditions, one person or household can build and own one ship, according to the long-standing fishing "convention", for safety, fishermen in one family do not share one ship and if they invest, they do not concentrate on one ship but divide it into many parts to be deposited on different ships, and members contribute capital as co-owners. To implement Decree 67, members must agree, so it is quite confusing”.

In addition, not all banks are enthusiastic about lending under Decree 67. According to regulations, all banks participate, but so far only 5 commercial banks have registered. According to Mr. Tran Huu Tien - Deputy Director of the Department of Agriculture and Rural Development, Deputy Head of the Provincial Steering Committee for the implementation of Decree 67: "There are still some other problems when implementing the policy. Specifically, due to the small number of newly built ships allocated (the whole province only received 100 ships while the people registered 874 ships), the allocation and selection of ship owners to borrow capital for new construction and upgrading is very difficult.

After the first round of registration was quite widespread, dividing the quota by hamlet leading to incorrect evaluation, the Department of Agriculture and Rural Development issued criteria for qualified ship owners with supporting documents to be reviewed by the appraisal council of communes, districts and provinces. Currently, the districts are directing the communes to continue completing the documents, so the list of ship owners has not been sent to the Provincial People's Committee for appraisal and approval. On the other hand, up to this point (November 10, 2014), the Ministry of Agriculture and Rural Development has not yet issued technical design models and cost estimates for iron-hulled ships and logistics service ship models. For shipbuilding facilities, there are also some additional conditions; necessary procedures and documents for building new or upgrading (100% new main engine, but what about other auxiliary engines on the ship?)...".

To proactively limit barriers and obstacles, the Provincial Steering Committee requested the State Bank Branch of the province to coordinate with commercial banks in the area to unify loan application documents according to Decree 67/CP to limit the situation of borrowing capital according to Decree 67 but each bank has a different form; at the same time, strengthen inspection and supervision of facilities; continue to urge commercial banks to promptly deploy and receive loan applications and promptly disburse to fishermen when meeting the prescribed conditions.

Through discussions with some fishermen in Quynh Lap, Quynh Phuong (Hoang Mai Town), Quynh Long, Quynh Nghia, Tien Thuy... (Quynh Luu), it is known that fishermen have changed their awareness when registering for loans under Decree 67. They have realized that this is a conditional credit package and to borrow capital, they must meet the prescribed criteria. Some households that are eligible can borrow to build new boats under Decree 67 but are still worried about the high unit price of the boat, the large counterpart capital of fishermen... The concerns of fishermen come from the reality of fishing activities for a long time, therefore, the Department of Agriculture and banks need to closely follow the wishes of fishermen in the area to soon have solutions to remove them, so that the positive policies of the Government can soon come into practice...

Nguyen Hai