(VOVworld) – In the first quarter of this year, Ho Chi Minh City’s total credit surplus expanded 2.3% against late last year and posted a year-on-year increase of 14%. This is a positive sign for the entire economy. 

A customer fills in a deposit form at a bank in HCMC. Many banks expect deposit and lending rates to drop by 0.6-0.7% point later this year (Photo: Uyen Vien)

With more contracts signed early this year, Ho Chi Minh City-based Tan Thanh Container Company is operating at full capacity but can’t meet the demand.

Through the city’s bank-enterprise connection program, Tan Thanh has borrowed 2.3 million USD from Vietnam Joint Stock Commercial Bank for Industry and Trade at a preferential interest rate of 6.9% to expand workshops, increase output capacity, and renovate technology.

As a result the company now turns out about 200 containers of goods per month, earning almost 2.8 million USD, up 150% from last year.

Tran Dieu Canh, Director General of Tan Thanh Container Company, said: “thanks to the preferential loan, we have been able to expand production. Lending procedures are much simpler now, requiring low collateral and fewer difficulties in the appraisal process. After working with the bank for a period of time, we now use our inventory as security for a loan.”

Tan Thanh is just one of hundreds of companies and individuals who have received preferential loans under the connection program so far this year, with a total disbursement of nearly 800 million USD with interest rates from 6.5 to 6.9%.

The municipal commercial banks have pledged to loan package almost 6 billion USD to firms and family-run businesses.

The State Bank of Vietnam has approved 14 commercial banks to offer loans for purchasing rice of the 2013-2014 winter-spring crop for reserve.

This year the program has expanded to include farmers. Recently seven banks, including Vietinbank, the Bank of Agriculture and Rural Development, and Sacombank loaned 35 million USD to farmers in Cu Chi, Hoc Mon, Can Gio, Binh Chanh, and Nha Be district.

Huynh Nguyen Anh Vu, an official at Sacombank’s branch in Thu Duc, noted: “to boost credit growth, since the beginning of this year our bank has launched various promotion packages for customers. They include preferential credit programs to support businesses during the Tet holiday and new corporate customers tailored to their needs.”

Vietinbank’s branch in Thu Duc saw credit growth of 6% in the first quarter. Nguyen Trung Thanh, deputy director general of Vietinbank, said: “we’ve actively sought customers and simplified our lending procedures. We gather information about potential clients on forums and association websites.”

Over the past two and a half years the program has been implemented in 24 districts and precincts in Ho Chi Minh City.

Nguyen Hoang Minh, deputy director of the branch of the State Bank of Vietnam in HCM City, said: “the main barrier is collateral assets. We’ve strengthened the handling of bad debts so that commercial banks can offer unsecured loans. We’ve allowed the Credit Guarantee Fund for SMEs to act as a guarantor for enterprises.”

Now that Ho Chi Minh City has expanded available capital, enterprises will have a greater opportunity to expand and develop business, production, and competiveness, boosting local socio-economic development.