Vietnam's capital market is so "lame"

Bu Huong Xuan - Oct 27, 2017 | 07:17 AM GMT+7

TheLEADERAccording to Tran Du Lich, economic experts, as long as the business is based entirely on capital from commercial banks, the capital market will not develop strongly.

Vietnam's capital market is so "lame"
Tran Du Lich at the program named "Entrepreneur Cafe". Photo: Huong Xuan

Tran Du Lich, member of the Economic Advisory Board, issued this warning at the program named "Entrepreneur Cafe" held by the Business Association of Ho Chi Minh City.

Compared with other countries in the region, outstanding credit loans of commercial banks in Vietnam is higher and very risky. The first reason is that Vietnamese companies based most on debt financing instead of equity. The second reason is that there is not much medium and long-term mobilized capital in the market.

The stock market currently mobilizes only 25 per cent of medium and long term capital in total capital for business needs of the whole society. Enterprises mainly borrow short-term loans from banks.

According to Tran Du Lich, other financial institutions such as the Credit Guarantee Fund, the Social Policy Bank, the Vietnam Development Bank, etc. do not do well in their roles.

He said that he had repeatedly asked banks to pay attention to small businesses to help them grow. He took BIDV (Bank for Investment and Development of Vietnam) as an example. BIDV only granted the big borrowers a loan, especially the state-owned giants so he wonder how the national economy can develop completely.

He also empasized that most of business loans are concentrated in commercial banks while commercial banks are doing social policies such as preferential loans for offshore fishing, hi-tech, hi-tech agriculture, etc.

Tran Du lịch stated that social policy loans must be made by the central bank and commercial banks only need to focus on trading. Each steps must be taken to make all activities of the bank go into the market and serve its function.