Tran Viet Anh, vice chairman of the HCMC Rubber and Plastics Association, said plastics firms had won many orders for export until June. However, plastics producers are facing a material shortage, and none of them dares to take out loans because of exorbitant interest rates.

“Unlike plastics companies in Thailand or China, where lending rates are only 2-3% per annum, local plastics firms still suffer high rates, and thus they decide to operate on their own funds, or funds appropriated from suppliers, leading to very poor competitiveness,” he said.

Banks currently lack confidence in small and medium-sized enterprises (SMEs), said Van Duc Muoi, general director of Vissan, who also serves as chairman of the HCMC Food and Foodstuff Association.

“Banks only care about large corporate clients, while SMEs are almost neglected,” he remarked. The average lending rate for SMEs is now 13-14% per year, he added.

He expressed a concern that local enterprises would not be able to compete with those from other countries in the region when the ASEAN Economic Community springs to life in 2015.

“Lending rates should be slashed further, allowing SMEs to restructure debts and begin a new cycle of production. Besides, there should be more VAT tax reductions and payment exemptions because enterprises are still mired in debts,” he suggested.

Pham Xuan Hong, chairman of Saigon 3 Garment Co. and vice chair of the Vietnam Textile and Apparel Association, said lenders were examining performances of textile firms very carefully and imposing many stringent requirements. Therefore, the industry players hesitate to borrow loans, but instead use their own funds.

“Most textile-garment companies are relying on their own resources to survive, waiting for a brighter day in the future,” Hong told the Daily on the sidelines of the meeting.

A report of the HCMC Union of Business Association (HUBA) delivered at the meeting shows that the city-based companies are facing three main problems, namely financial distress, high lending rates and inventory.

They can hardly take out loans due to cumbersome procedures and sky-high interest rates. Most SMEs have to borrow loans with an interest rate of 18-21% per year, while large enterprises are offered an annual rate of 10-12%.

Banks have little confidence in repayment ability of their clients. Meanwhile, enterprises with idle money do not make investment, but they are just waiting, said HUBA.

Truong Phu Cuong, chairman of the HCMC Construction and Building Materials Association, proposed banks should lower lending rates to 8-10% and remove unnecessary procedures.

In response to the proposals of association leaders, HCMC Vice Chairman Le Manh Ha said the municipal government would ask the Prime Minister for lower interest rates so that enterprises can take out loans to maintain their operations.

So far, preferential lending programs have brought about modest effect. Therefore, in the coming time, the city will unit such programs, focusing on each troubled business, he said.

Vietnamnet