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The Vietnam Chamber of Commerce and Industry (VCCI) says in its latest provincial competitiveness index (PCI) report that 46.85 percent of SMEs surveyed said they had difficulties in accessing bank loans in 2021. The figure was higher than the 40.73 percent in 2020.

The biggest obstacle for enterprises to access bank loans is the lack of assets. At least 81 percent of polled businesses said they can’t borrow money from banks if they don’t have collateral. The other obstacles are complicated procedures and the banks’ application of credit access conditions that are disadvantageous for businesses (46 percent).

Fifty-one percent of businesses said they seek capital from friends and relatives, and 18 percent borrow money from other businesses, or mortgage assets for loans and sell their assets. The number of businesses borrowing money from non-bank credit institutions (financial leasing companies and people’s credit funds) accounts for 11 percent.

Meanwhile, 4 percent of businesses said they have had to borrow money from black credit sources at very high-interest rates, at 60 percent per annum on average, which is six times higher than bank loan interest rates.

The PCI Report said that SMEs now account for 98 percent of total enterprises in Vietnam. The SME Support Law, which took effect on 1 January 2018, has offered modest support for enterprises and official loan access.

Only 7.34 percent of businesses can access official loans through the Credit Guarantee Fund for SMEs.

According to the State Bank of Vietnam (SBV), as of the end of 2021, the outstanding loans to SMEs had accounted for 19.34 percent of total outstanding loans, a small figure noting that SMEs account for 98 percent of enterprises.

Meanwhile, a survey by McKinsey conducted two years ago found that SMEs in Vietnam had demand for up to US$21 billion worth of capital, but 98 percent of enterprises found it difficult to access loans.

Growth stifled due to a lack of capital

Mac Quoc Anh from the Hanoi Association of SMEs pointed out that because of the lack of capital, SMEs remain small as they don’t have the funds to invest in technology. As a result, the majority of Vietnam’s enterprises still use outdated technologies, which are 2-3 generations behind the rest of the world.

A survey by VCCI found that over 50 percent of private enterprises borrow money from banks to cover their operating costs, and not for new machines and technology. The number of enterprises using high technologies is just 2 percent, while capital for technology renovation accounts for only 0.2-0.3 percent of revenue.

According to  Dong Nai Young Entrepreneurs’ Association, most of its 500-member companies are small enterprises with a revenue of several billion dong. The money is just enough to buy land, build


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