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Vietnam central bank cuts rates for priority sectors
Publication Date : 24-03-2014
The State Bank of Vietnam (SBV) has reduced its maximum interest rates for five priority sectors, such as agriculture, export, supporting industry, small and medium-sized enterprises and high-tech firms.
The new rate for short-term loans, which was set at 8 per cent yearly, took effect on March 18.
Industry officials welcomed the move, stressing the assistance the new rate would provide.
"Enterprises began purchasing rice for storage on March 20. Therefore, the cut in lending rates helped increase rice prices, which have dropped sharply in the past days," said Lam Anh Tuan, director of Thinh Phat Food Co. Ltd. in Cuu Long (Mekong) Delta's Ben Tre Province, as quoted by Nong thon ngay nay newspaper.
Pham Thi Huan, director of Ba Huan Co. Ltd in HCM City, said she was pleased with the reduction in lending rates. "The cut in lending rates will encourage enterprises operating in the agriculture sectors, such as my company, to invest in modern machinery and apply new technologies along the production line," Huan said.
The lending rates for supporting industries and exports in Vietnam remain high, compared with rates in other countries, making it difficult for some domestic enterprises to compete, according to Cafatex Fishery JSC director Nguyen Van Kich. "Therefore, we are still considering further cuts," Kich said.
Lowering interest rates is SBV's attempt to encourage enterprises to take out more loans to support increases in economic activity and, therefore, boost the economy, according to Nguyen Tri Hieu, a banking expert.
However, several enterprises and farmers raised concerns over the procedures required to secure loans.
The government should closely supervise and monitor credit institutions to ensure that the process of obtaining loans will be uncomplicated, according to a director of a company that trades rice in Can Tho City.
"The SBV has required that farmers and fishermen seeking loans must submit too many legal documents and procedures, making it difficult for them to receive loans," Deputy Chairman of People's Committee of Hoa Hiep Nam Commune in central Phu Yen Province, Ngo Tan, said.