Credit support package for forestry and aquaculture increased to 30 trillion VND

A boost for export businesses

The Government and the Prime Minister recently issued several directives aimed at facilitating access to credit capital to support production and business activities, thereby promoting economic and social recovery and development.

The Prime Minister has tasked the State Bank with researching and implementing a 15 trillion Vietnamese dong credit package to support businesses in the forestry and aquaculture processing industries, in addition to tax and fee exemptions and extensions. Consequently, the credit package is expected to reinforce the agricultural sector's role as an economic pillar. The support package, which lasts from July 2023 to June 2024, concluded ahead of schedule and demonstrated surprising effectiveness.

Mr. Le Quy Viet, Chairman of the Board of Directors of Thanh Hoa Seafood Import-Export Company, revealed that the company has encountered numerous challenges over the past four years, including the impact of the Covid-19 pandemic, and market fluctuations as a resullt of global conflicts. The company was one of the 6,000 customers who benefited from the credit package.

The United States and European markets are the company's primary export markets. However, the economic recession in these markets have resulted in increased operating costs and significant challenges in production and sales activities.

"The company's working capital currently relies heavily on credit from banks. As a result, credit policies have a significant impact on our company. We are grateful to have the government's attention and assistance. We are able to continue our regular and continuous production activities because of this support," Mr. Le Quy Viet stated.

According to Mr. Nguyen Hoai Nam, Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers, global inflation and seafood exports faced difficulties in 2023 due to a significant decline in demand from various countries around the world.

After receiving instructions from the government, the State Bank actively looked for solutions to support businesses. Firstly, the State Bank introduced three reductions in the operating interest rate, followed by the 15 trillion dong credit support package for the forestry and aquaculture sectors. Consequently, the credit package offered substantial support for the industry's recovery, and provided encouragement for stakeholders within the sectors.

The State Bank has meticulously reviewed and assessed the credit support package prior to its implementation, which was successful in terms of timing and practical effectiveness. The 15 trillion dong package represents a breakthrough among the various proposals the State Bank made to the government.

"Amidst the economic challenges of 2023, the lowered interest rates has significantly alleviated pressure on production and business activities. Few credit packages have been disbursed as quickly and as effectively as the 15 trillion dong package. Notably, the aquaculture sector has received 74 percent of the disbursed amount," shared Mr. Nam.

Additionally, Mr. Nam highlighted several encouraging indicators within the current global economic climate, including reduced volatility compared to 2023, controlled inflation, declining inventory levels, and rising export prices. On the other hand, geopolitical fluctuations provide remarkable opportunities for Vietnam's aquaculture sector.

As a result, interest rate reduction programs and support credit packages for the forestry and aquaculture sectors are essential in the current economic climate. They encourage businesses and farmers to reinvest capital in anticipation of the economy's revival.

"According to a preliminary survey, the Association found that aquaculture export businesses, breeding facilities, storage centers, among others, are expecting to gain access to suitable, low-interest loans, as well as this remarkable credit support package. We hope that banks will consider increasing the credit ratio for export businesses to at least 50 percent of the total outstanding loans, instead of the 27-28 percent in the previous 15 trillion dong package," added Mr. Nguyen Hoai Nam.

Increasing the credit package to 30 Trillion dong

According to Ms. Ha Thu Giang, General Director of the Department of Credit for Economic Sectors at the State Bank, the State Bank regards agriculture as a priority sector for capital investment. Accordingly, the Bank has implemented various policies to support sustainable development and enhance the value-added of this sector.

On February 20, 2024, following the conclusion of the 15 trillion dong credit support package, the Governor of the State Bank requested credit institutions to consider increasing the credit support scale to 30 trillion dong. This increase in scale is expected to assist forestry and aquaculture businesses in recovering and developing production. This proposal was unanimously agreed upon by various commercial banks.

To date, commercial banks have completed their registration to increase credit support scale. Additionally, they will continue to disburse loans with 6,500 loan applicants and an accumulated loan disbursement amount of over 17.5 trillion dong. Nearly 83 percent of the loan disbursement amount has been directed towards business customers.

"The credit support package for the forestry and aquaculture sectors is a very practical and effective solution, which contributed significantly to addressing challenges and stabilizing production. Moreover, the package has allowed these two sectors to maintain their positions within the top six export categories with a minimum export turnover of 3 billion USD. These categories include rice, fruits and vegetables, coffee, cashews, shrimp, wood and wood products," Ms. Giang added.

According to Mr. Dao Minh Tu, the credit support package for the forestry and aquaculture sectors functions as a credit policy to assist businesses in overcoming challenges in the current economic climate. Subsequently, the State Bank, commercial banks, and businesses have identified and evaluated issues currently facing the agricultural, forestry, and aquaculture sectors after concluding the 15 trillion dong credit support package.

Commercial banks participating in the 30 trillion dong credit support package for the forestry and aquaculture sectors must provide detailed announcements and guidance on loan conditions. Additionally, commercial banks should their increase lending limits and offer preferential collateral policies for businesses. In return, businesses must voice their concerns regarding potential capital losses to address collateral issues.

"We need to pay additional attention to the agricultural, forestry, and aquaculture import-export sectors. Vietnam, as an agricultural nation, possesses advantages in terms of crop production and aquaculture, so we need to focus our efforts to develop these sectors. We must leverage this strength to enhance our competitiveness on a global scale. After the 30 trillion dong credit support package is exhausted, I would like to propose a 45 trillion or even 50 trillion dong credit support package to support businesses in overcoming challenges in the current economic climate," Mr. Tu stressed.

During the workshop "Credit support to maintain forestry and aquaculture as multibillion dollar export sectors" held in Hai Phong city, Ms. Phung Thi Binh, Deputy General Director of Agribank, stated: "After the State Bank issued a document on the continuation of the credit support package with an increased support scale, Agribank has registered with the State Bank with plans to increase our support scale to 8 trillion dong. With over 3,300 loan applicants, our loan distribution amount has exceeded 5.5 trillion dong, and the outstanding loan balance has reached approximately 5 trillion dong."