June 22, 2022 | 14:34 GMT+7

Businesses ‘thirsty’ for capital

Quoc Phong - Mộc Minh -

Accessing capital poses a number of issues for businesses.

Photo: Illustration
Photo: Illustration

Demand for capital to fund the recovery of businesses has been rising since Covid-19 was largely brought under control.

According to Ms. Ly Kim Chi, Chairman of the Food Association of Ho Chi Minh City, businesses face major difficulties because the prices of input materials for production are increasing, some by more than 40 per cent, while domestic gasoline prices are also at record highs.

“We are ‘thirsty’ for capital,” she said. “Previously, only about VND100 billion ($4.3 million) was needed to stockpile raw materials, but price increases have pushed up the cost of reserves by 50 per cent, which means VND150 billion ($6.4 million) is now needed. We propose that banks support increases in loan limits to businesses by re-evaluating collateral such as real estate.”

Mr. Nguyen Dang Hien, General Director of the Tan Quang Minh Production - Trading Co., said businesses have always considered bank loans as the main source of capital. Now, however, taking out loans has become quite difficult.

Accessing capital is difficult for many businesses, even though the government is implementing a 2 per cent loan interest rate support package for new loans, which banks lacking credit space are unable to disburse.
Therefore, Mr. Nguyen Phuoc Hung, Vice Chairman of the Ho Chi Minh City Union of Business Associations (HUBA), suggested that commercial banks adopt policies to help businesses borrow for reinvesting in production, recovery, and development.

However, Dr. Can Van Luc, a Member of the National Financial and Monetary Policy Advisory Council, said that businesses must diversify their capital sources. Bank loans are not the only channel and account for only 47 per cent, while other sources include FDI (14.8 per cent), corporate bonds (21.5 per cent), and stocks and public investment.

To successfully raise capital, according to Dr. Luc, businesses need to be transparent about their operations and financial statements, demonstrate goodwill in providing information to credit institutions, restructuring debts, and developing appropriate business plans, diversify capital sources, and proactively approach recovery programs.