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Vietnam Import Export News

Vietnam Business » Vietnam Import Export News » High interest rates hinder export loans

High interest rates hinder export loans

Businesses complain that if the interest rates on loans remain high, Vietnamese products lose their competitiveness in the global market. The main characteristic of Vietnamese enterprises, especially small and medium enterprises is that they have a small capital, and businesses to use bank loans. In general, Vietnamese businesses should take 50-70 percent of its total assets.

Therefore, high rates on loans, credit has become an obstacle that makes Vietnamese products less competitive on the world market. Cost of capital in Vietnam is two and a half times higher than in other countries Vo Truong Thanh, general manager of Truong Thanh Furniture Corporation (TTF), admitted that if Vietnamese products are for sale on the same markets with products from other countries, it is very difficult for Vietnamese enterprises to compete products from other countries. This is because companies in other countries can borrow at low interest rates 5-6 percent, while Vietnamese enterprises have to borrow 13-15 per cent. In addition, Thanh said, the production cost of Vietnamese products is higher than in other countries because Vietnamese companies are still paying high costs for complicated procedures, which in many cases, make the companies lose opportunities business. They also have to pay high fees for the storage of postage, and many other types of expenses. As for TTF, in addition to equity of 692 million VND to have more capital to serve businesses, the company has to borrow U.S. $ 1.568 million dong short term lending. Although the government tries to lower interest rates on loans to help businesses reduce production costs, companies continue to complain that they now have to borrow money at high interest rates. Thanh said that if current interest rates remain high, Vietnamese businesses will have difficulty competing with the products exported by other countries. high interest loan that the benefit The high interest rates on loans, high cost of capital, as it would entail higher production costs, which will undoubtedly affect corporate profits. During the first six months of the year, TTF has made a profit before tax of 42 million VND. This figure represents the sharp increase of 230 percent over the same period last year. However, the figure is still less than expected for the capital they have. The financial reports for the first six months of the year published recently also showed that although many companies had higher profits than the same period last year the profit is still relatively low. An Giang Seafood Import-Export Company (FMO) is 616 billion VND in shareholders equity and hundreds of workers. However, in the first two quarters, the company earned 28 billion dong in net revenue only. Although the profit is much higher than the same period last year, is exactly equal to 4.5 percent of equity. Meanwhile, the short-term loan of 429 million dong, and assuming that the interest rate is 14 percent per year, AGF will pay 30 million dong of interest, which is higher than its profit.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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