City stimulus plan out of reach
City stimulus plan out of reach
Noticing signs of an economic recovery, the HCM City-based Duy Khanh Mechanical Engineering Company decided to expand production with loans under the city's demand stimulus programme.
But the plans remain on paper due to the cumbersome administrative procedures for borrowing.
"Under the stimulus programme, it should take no more than 33 days for enterprises to complete necessary procedures and get preferential loans if their projects meet all requirements," the company's director, Do Duy Tong, said.
"However, we have been waiting for four months without a reply from relevant agencies.
"This delay has disheartened many enterprises that they have opted out of the stimulus programme."
Minh Duc Company has a similar tale of woe.
Its director, Nguyen Quoc Anh, said the company had submitted all necessary documents required under the stimulus programme several months ago but was yet to get a reply.
The city People's Committee launched the Demand Stimulation Programme in 2000 to encourage investment, develop infrastructure and speed up restructuring of the economy.
Businesses willing to invest in certain priority sectors can get loans at low interest rates, which is expected to boost the competitiveness of local products.
But not as many firms as expected have been able to borrow.
According to the Department of Planning and Investment, since May 2011 – when the programme saw a major revamp to improve it – only 85 projects have been approved with a total investment of VND6.8 trillion (US$320 million) and loans of VND3.2 trillion ($150.6 million) at low interest rates.
The programme has a funding of only VND27 trillion ($1.27 billion), and the city plans to augment it in the coming years.
Economists have said the amount is too modest since the programme is meant to benefit a multitude of sectors like industry, agriculture, infrastructure, environment, healthcare, education, professional training, and culture.
At a meeting with the city Department of Industry and Trade in late March, many business executives said the programme's regulations should be further simplified so that more firms could get preferential loans to take advantage of the economic recovery and the country's international integration.
The loan periods should be more flexible and be based on the needs of each project to ensure sufficient supply of funds for the project, they said.
Businesses in sectors identified as priority – such as supporting industries, waste treatment, and environmental protection – should have interest subsidised by 50 per cent or even fully, they said.
The time needed for authorised agencies to clear the documents required to apply for loans should be made very clear to enable applicants to regulate their production and trading activities, they added.
