State capital is expected to account for only 31-34% while private capital accounts for 45-48% of total social investment for the period 2016-2020. The total investment capital of the society at this stage is estimated at VND9-10 billions. Private enterprises now account for 97.6%, contributing 45% of GDP and 31% of total revenues, generating 51% of total employment. However, these businesses are mostly small and medium. They have not been treated equally in accessing capital.
Difficult access to cheap investment capital
Mr. Dau Anh Tuan, Head of Legal Department of Vietnam Chamber of Commerce and Industry (VCCI), said that private enterprises can not be stronger because of the limited access to capital for development. Therefore they are not active in production business. The proportion of small and medium sized enterprises (SMEs) with loans from banks is remarkably lower than that of large enterprises. On average, only 40% of microenterprises have accessed to bank capital. This situation happens with 62%of small enterprises, 74% of medium enterprises and up to 81% of large enterprises.
Phan Ngoc Minh, General Director of Nhat Minh Co., Ltd., said that the private sector contributed significantly to the construction and national reconstruction. However, the "favors" of investment and capital will be for the state sector and foreign investment. Private businesses are disadvantaged when the business environment is unfavorable to the development of the private sector; the competitive environment is not equal.
According to general assessment, in the recent 5 years, ability to access to capital of private enterprises has not improved. The percentage of enterprises that can access to bank loans increased slightly by 1-2% per year. In particular, small-scale private enterprises are borrowed with more expensive cost, even sham loans although the interest rates have tended to fall. The private businesses are also required to have collateral if they want to get a loan. Even if the company has collateral, the loan period is only within 1 year with high interest rates. Compared with large corporate loans, with high interest rates and short loans, private enterprises will find it difficult to manage long-term business plans and be forced to "take short-term."
Administrative procedures are complicated with the appearance of the beg-give mechanism. The mechanism of accessing loans and programs to support private enterprises, including judicial assistance, information regimes, training support have not been properly paid attention significantly limiting the effectiveness of the operation of the private sector.
Mr. Do Hung Cuong, Chairman of the Board of Directors of Kim An Agricultural Cooperative stated difficulties in the process of borrowing capital from banks: "Production of products reaching VietGAP standards requires large capital, but cooperatives can not borrow bank capital, thus there is lacking investment capital. We do not dare to ask for loans at preferential interest rates, and just ask normal interest rates.
However, bank loan procedures are too complicated, even "making it difficult" for borrowers. People who work in agriculture often have not big property; not high profits, but always bear the risk. Therefore, the state should pay attention to create mechanisms for the output of products, so that we can develop production and bring many collective economic benefits.
It can be said that private businesses are being treated as "adopted children", while state-owned enterprises are the preferred offspring of "milking" the budget. Despite the priority of loans, but they are loss of trillions. Land for private sector is often limited with high prices. Land for state-owned enterprises is too much etc. In order to develop the private sector, the state should have preferential policies on taxes, land, and capital for the basic industries of the industry such as precision engineering, supporting industries etc.
Therefore, it is advisable to lower lending rates for private companies to invest in machinery and equipment, even without interest rates. When capital is needed, the collateral of enterprises in the agricultural sector is not many. The bank's appraisal of capital is based on real estate assets, in addition to the valuation of agricultural land is very low compared to real estate as construction of buildings, business services.
The company has green grapefruit growing areas. This grapefruit is worth within 3-5 million VND / tree. there are about 500-700 trees on such a hectare. The value of assets on this agricultural land is also huge, but when the bank verifies the assets for the loan, they do not consider the property.
Need for capital breakthrough mechanism
Currently, there is no enterprise in Vietnam appraising the assets of enterprises in the field of agriculture with assets attached to land. It is a disadvantage for businesses in the agricultural sector.
Mr. Do Van Vu, Director of an agricultural trading company hopes: "Banks need to have a policy of stretching lending time for at least five years; only if interest rates are pulled down will the domestic agricultural sector be developed".
Mr. Ly Than Sin, Director of Minh Long Hung Embroidery Garment JSC., said: "The Company wants to invest in machinery and suggest the bank support loans, but the banks refuse with the reason that they need the certificate. However, in fact, machinery of the garment sector has no certificate of registration as buying a car or certificate of house use right."
Mr. Pham Ngoc Hung, Vice President of Ho Chi Minh City Business Association analyzed: "State-owned enterprises own assets, capital and especially land priorities, budget approach, capital approach etc. This makes competition unequal.
Professor Nguyen Mai, Chairman of the Association of Foreign Investment Enterprises (FDI) suggested: "It is advisable to change the mortgage mainly from movable property to real estate by credit contracts, payment contracts, trading contracts and property that will pay, and then it will solve the mortgaged problem.
In order to achieve the goal of capital mobilization from private sector, the Ministry of Science and technology will fully implement measures for the private sector to be an important driving force in the economy.
