VietNamNet Bridge – A lot of enterprises are rushing to borrow capital in foreign
currencies, before the new regulation which tightens the control over foreign
currency loans takes effect on May 2.
Under
the Circular No. 03 on the conditions for borrowing capital in foreign
currencies, which will take effect from May 2, commercial banks will only lend
dollars to the enterprises which can prove that they have the receipts in
foreign currencies from their production and business to pay debts.
The enterprises, which do not have the income in foreign currencies or have inadequate income in foreign currencies, will be able to borrow money in foreign currencies after they get the approval from the State Bank of Vietnam. The bank will release official document on every specific case.
Banks rush to lend, businesses rush to borrow
The new regulation with the tightened rules has been applauded by experts, who once warned that the lending in dollars in masses would lead to the high risks: when the loans become matured, businesses would rush to seek to buy dollars, which will put a hard pressure on the foreign currency market.
Businesses now believe that it would be better to borrow dollars to enjoy the low interest rate than borrow dong to bear high interest rate (the gap between the dong and the dollar interest rates is 10-12 percent). Therefore, while the new decision is supported by experts, it does not satisfy businesses.
A lot of businesses, especially importers, are hustling to contact banks to ask for foreign currency loans. Meanwhile, commercial banks have confirmed that the demand for loans has been increasing sharply in the last two weeks.
Nguyen TT, Director of an import company, said that he has to follow necessary procedures to borrow dollars right now to prepare for the orders in the future, because he may not be able to borrow dollars from May.
“We now still can borrow dollars easily, because we can satisfy all the requirements set by banks,” he said.
However, some commercial banks have said “no” to the request like that. L, deputy head of the credit division of a big bank, said that a company asked for a dollar loan to import equipments.
The representative of the company suggested that the two signs should sign a contract first, while the disbursement would be made later, because the company would only need the dollars in June. Therefore, the bank has refused to provide loans to the enterprise, despite the profuse capital.
Meanwhile, another banker has revealed that the bank satisfies nearly all the requests for loans from enterprises, because the bank’s capital in dollar is profuse.
Borrowing or buying dollars?
Commenting about the new decision to narrowing the subjects to foreign currency loans, Dr Nguyen Duc Thanh from the Hanoi National University, said that the borrowers are export companies or import-export companies, while export companies can arrange dollars themselves and no need to borrow from banks. The companies export products and get foreign currencies for the payment for the exports.
Therefore, the biggest sufferers of the new regulation would be import companies, which need dollars to import products, but do not export to earn dollars to pay bank debts.
In fact, there are many companies which import accessories and parts for domestic production, but their products are consumed in Vietnam only. These enterprises cannot borrow from banks, and they would have to seek dollar capital from other sources. As such, Thanh has warned, another non-bank monetary market would take shape to satisfy the demand.
However, Nguyen Hoang Minh, Deputy Director of the HCM City Branch of the State Bank, said that if enterprises need dollars but cannot borrow, they can buy dollars from banks.
Source: PL TPHCM
The enterprises, which do not have the income in foreign currencies or have inadequate income in foreign currencies, will be able to borrow money in foreign currencies after they get the approval from the State Bank of Vietnam. The bank will release official document on every specific case.
Banks rush to lend, businesses rush to borrow
The new regulation with the tightened rules has been applauded by experts, who once warned that the lending in dollars in masses would lead to the high risks: when the loans become matured, businesses would rush to seek to buy dollars, which will put a hard pressure on the foreign currency market.
Businesses now believe that it would be better to borrow dollars to enjoy the low interest rate than borrow dong to bear high interest rate (the gap between the dong and the dollar interest rates is 10-12 percent). Therefore, while the new decision is supported by experts, it does not satisfy businesses.
A lot of businesses, especially importers, are hustling to contact banks to ask for foreign currency loans. Meanwhile, commercial banks have confirmed that the demand for loans has been increasing sharply in the last two weeks.
Nguyen TT, Director of an import company, said that he has to follow necessary procedures to borrow dollars right now to prepare for the orders in the future, because he may not be able to borrow dollars from May.
“We now still can borrow dollars easily, because we can satisfy all the requirements set by banks,” he said.
However, some commercial banks have said “no” to the request like that. L, deputy head of the credit division of a big bank, said that a company asked for a dollar loan to import equipments.
The representative of the company suggested that the two signs should sign a contract first, while the disbursement would be made later, because the company would only need the dollars in June. Therefore, the bank has refused to provide loans to the enterprise, despite the profuse capital.
Meanwhile, another banker has revealed that the bank satisfies nearly all the requests for loans from enterprises, because the bank’s capital in dollar is profuse.
Borrowing or buying dollars?
Commenting about the new decision to narrowing the subjects to foreign currency loans, Dr Nguyen Duc Thanh from the Hanoi National University, said that the borrowers are export companies or import-export companies, while export companies can arrange dollars themselves and no need to borrow from banks. The companies export products and get foreign currencies for the payment for the exports.
Therefore, the biggest sufferers of the new regulation would be import companies, which need dollars to import products, but do not export to earn dollars to pay bank debts.
In fact, there are many companies which import accessories and parts for domestic production, but their products are consumed in Vietnam only. These enterprises cannot borrow from banks, and they would have to seek dollar capital from other sources. As such, Thanh has warned, another non-bank monetary market would take shape to satisfy the demand.
However, Nguyen Hoang Minh, Deputy Director of the HCM City Branch of the State Bank, said that if enterprises need dollars but cannot borrow, they can buy dollars from banks.
Source: PL TPHCM
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