Domestic producers expect commercial banks to further cut rates this year
The President of the Animal Production Processing Import and Export Co., Doan Trong Ly told the Nguoi lao dong (The Labourer) newspaper that only Vietinbank had cut its interest rate from 9 per cent to 8.7 per cent so far this year. Other banks still kept their rates unchanged, Ly said, adding that his company was borrowing from Agribank at the rate of 9 to 10 per cent annually.
They added that such high rates have made Vietnamese products less competitive in both the domestic and international markets.
He added that most Vietnamese businesses were forced to take bank loans at an annual interest rate of 8.9 to 10 per cent, while their rivals in other countries could access such loans at only 2 to 3 per cent.
Despite the interest rate reduction on bank loans during the past year, domestic producers expect commercial banks to further cut rates this year.
Currently, loans with lending interest rates of more than 15 per cent and 13 per cent account for roughly 3.9 per cent and 10.65 per cent of the loans offered, respectively. (Photo VNA)
Small and medium-sized enterprises get loans at even higher rates of 12 per cent.
Ly said the reduction in lending interest rates was too slow and not commensurate with deposit interest rate cuts. It was also not reasonable as Viet Nam's inflation was currently near the same level as other countries' but Viet Nam's lending interest rates were two to three times higher than the inflation rate.
According to the central bank's Monetary Policy Department, the lending interest rate this year declined by approximately 2 percentage points, which brings the rate to the same level seen during the 2005 to 2006 period.
Commercial banks have also cut rates for previous loans. Currently, loans with lending interest rates of more than 15 per cent and 13 per cent account for roughly 3.9 per cent and 10.65 per cent of the loans offered, respectively. These values are lower, compared with the 6.3 per cent and 19.72 per cent recorded in December last year.
The Director of the Bank for Investment and Development at Viet Nam's Training Centre, Can Van Luc suggested that the central bank scrutinise further cuts in deposit interest rates before removing the rate cap.
He said the administrative regulation currently has no effect as commercial banks' liquidity is good, adding that it will help banks to further cut lending rates by 0.5 to 1 percentage points./.
Complied by VNF