SBV too hasty to stop capital mobilization and lending in foreign currencies
SBV too hasty to stop capital mobilization and lending in foreign currencies
The State Bank of Vietnam has been taking drastic measures to implement its plan to stop the capital mobilization and lending in foreign currencies. Meanwhile, experts believe that the central bank should give more time to commercial banks to prepare for the plan.
Businesses eager for dollar loans
Under the Circular No. 03 of the State Bank of Vietnam, a lot of enterprises would have to stop borrowing in foreign currencies from January 1, 2013. This is one of the steps towards the goal set up by the central bank to stop the capital mobilization and lending in foreign currencies.
However, the bank has been warned that if it is too impatient about the plan, this would weaken the competitiveness of Vietnam’s export products.
After one month, a lot of Vietnamese businesses would have no more opportunity to borrow money in foreign currencies to sell for dong for domestic use. This means that they would have no more opportunity to access the low cost capital source, and they would have to borrow in Vietnam dong at higher interest rates.
Analysts have warned that the big difficulties Vietnamese enterprises are meeting would become even more serious, if they cannot take full advantage of the cheap capital. Economists have also suggested that the State Bank should extend the deadline for some more time, allowing the enterprises borrow foreign currencies to import materials for making products for exports.
A senior executive of the Vietnam Food Association said Vietnamese exporters now have to compete fiercely with others in the international market already, especially when they bear very high lending interest rates.
In principle, export companies can access the dong loans at the preferential interest rate of 11 percent from some commercial banks. However, in reality, they cannot access the loans because no one would come forward and act as the guarantor for the loans.
Therefore, borrowing dollars proves to be the best solution for them, because this allows saving the capital costs (the dollar interest rate is 6-7 percent).
Deadline should be extended to 2015?
The deputy general director of a joint stock bank has confirmed that the demand for dollar loans is still very high, not only from export companies, but from domestic manufacturers as well.
However, since the State Bank has tightened the lending in foreign currencies, the credit has been on the decrease.
Especially, the State Bank sets the ceiling dollar deposit interest rate at a very low level of two percent per annum. Meanwhile, commercial banks cannot push up lending once they meet difficulties in the capital sources.
A report showed that by the end of November, the capital in foreign currencies mobilized by the commercial banks in HCM City decreased by 8.9 percent in comparison with the same period of the last year. Meanwhile, the outstanding loans in foreign currencies decreased by 6.5 percent.
Dr Le Xuan Nghia, a well-known economist, thinks that the goal Vietnam is striving for is to stop the capital mobilization and lending by 2015.
Analysts have pointed out that it would be a big disadvantage for export companies if they cannot keep accounts in foreign currencies. This means that when receiving foreign currencies from the foreign partners as the payment for the exports, they would have to sell foreign currencies at the prices to be defined by banks. Meanwhile, if they need foreign currencies later, they would have to buy back from banks at high prices.
vietnamnet
