15 trillion VND credit package for forestry - aquaculture possibly suspended by banks

Disbelief from businesses in the wood industry

During a recent meeting with Binh Dinh Provincial People's Committee, Le Minh Thien, Chairman of the  Forest Products Association of Binh Dinh (FPA Binh Dinh), reported that the 15 trillion VND credit package designated for the forestry and aquaculture sectors by the government and the State Bank of Vietnam (SBV) has not reached the members of FPA Binh Dinh.

Chairman Le Minh Thien noted that state-owned banks have been assigned by the government and SBV to implement a 15 trillion VND credit package. Accordingly, they will help facilitate business loans,  address financial challenges and support the maintenance, development of business operations.

However, the aforementioned banks have failed to take the initative in providing guidance to businesses. Additionally, the overly complicated application procedures and high interest rates pose as a significant challenge to the business community. Although multiple businesses in the wood industry from Binh Duong and Dong Nai provinces have successfully utilized the 15 trillion VND credit package, members of FPA Binh Dinh are facing significant difficulties in accessing the same package.

"The wood industry in Binh Dinh province has shown signs of recovery since the beginning of 2024 after a prolonged difficulties. The wood processing industry is also possessing the potential to recover. Presently, businesses in the wood industry from Binh Dinh arestockpiling materials to boost year-end production output. As a result, the demand for loans is very high. FPA Binh Dinh hopes that the State Bank of Vietnam’s branch in Binh Dinh will encourage commercial banks to assist wood businesses in accessing loans for production and business operations," Chairman Le Minh Thien commented.

Affirmations from the banking sector

Following Le Minh Thien's remarks, Nguyen Van Thuy, General Director of Vietcombank's branch in Binh Dinh, stated: "According to the central bank's regulations, businesses that failed to receive loans from interest-subsidized credit packages can still access the 15 trillion VND credit package if they meet the bank’s requirements, as implemented by Vietcombank Binh Dinh."

"Consequently, since July 2023, the bank has contacted and provided detailed information to customers regarding the 15 trillion VND credit package. Additionally, the bank has reduced loan interest rates, simplified procedures, and enabled customers to acquire loans. As of June 26, 2024, 26 customers in the forestry and aquaculture sectors, including members of FPA Binh Dinh, have acquired loans from the 15 trillion VND credit package at Vietcombank Binh Dinh, with outstanding loans amounting to 1.15 trillion VND; short-term interest rates range from 4-6% per annum, and medium-term rates are 8% per annum," General Director Thuy added.

Nguyen Xuan Hung, General Director of Agribank Binh Dinh, stated that the bank has actively implemented various credit programs in the agriculture and rural development sector, including the 15 trillion VND credit package. Agribank Binh Dinh also provides various utility services, offering customers with multiple options to address financial challenges and promote production, business operations.

"This is also a solution to help Agribank Binh Dinh maintain its credit growth target for 2024. Agribank Binh Dinh is always open to all customers, including members of FPA Binh Dinh. The current capital and loan limits are very high; and as long as customers are able to meet the loan requirements, the bank will disburse funds immediately," General Director Nguyen Xuan Hung affirmed.

Regarding this issue, Nguyen Tra Duong, General Director of the State Bank of Vietnam's branch in Binh Dinh, noted that following the directive of the State Bank of Vietnam in July 2023, four state-owned banks and several private banks in Binh Dinh have implemented the 15 trillion VND credit package. These banks have applied loan interest rates that are 1-2% per annum lower than the average interest rates for the same term at commercial banks, which comply with the government and SBV’s directives. By May 30, 2024, 28 customers had acquired loans from this credit package, with loan sales reaching 3,081.5 billion VND, marking an increase of 1,549 billion VND compared to the end of 2023. Additionally, outstanding loans amounted to 1,160.5 billion VND, marking an increase of 181.5 billion VND.

According to General Director Nguyen Tra Duong, the 15 trillion VND credit package consists of funds independently raised by the banks, providing term loans to businesses in the forestry and aquaculture sectors. Notably, the package features interest rates lower than the average rates for the same term at other banks. This approach is aimed at addressing financial challenges for local businesses, as an alternative to the State subsidizing loan interest rates for businesses.

"The associated banks directly fund the 15 trillion VND credit package, so they must balance the goals of credit growth and capital safety. Banks will disburse loans to businesses that meet the requirements. Consequently, FPA Binh Dinh and the banks need to have a mutual understanding in order to resolve the issue. The State Bank of Vietnam's branch in Binh Dinh regularly monitors the local banks' compliance with directives from the State Bank of Vietnam and their headquarters regarding the implementation of this credit package. Subsequently, the banks must report to Binh Dinh Provincial People's Committee," General Director Nguyen Tra Duong noted.

General Director Nguyen Tra Duong also noted that the 15 trillion VND credit package for the forestry and aquaculture sectors is set to expire on June 30. However, as acknowledgement of the benefits for both banks and local businesses, the State Bank of Vietnam proposed the government to increase the package limit to 30 trillion VND and extend its duration until the end of 2024. Accordingly, the government has agreed with the SBV’s proposal and instructed immediate implementation. This initiative presents a valuable opportunity for members of FPA Binh Dinh to access credit loans.

In an interview with Vietnam Agriculture on the morning of June 30, Chairman of FPA Binh Dinh Le Minh Thien reported that not a single member of FPA Binh Dinh has accessed the 15 trillion VND credit package to date.