When businesses and banks find common ground
As a business operating in the field of rice purchasing, processing and exporting, Hoang Minh Nhat Joint Stock Company (Thoi Lai town, Thoi Lai district, Can Tho city) currently has an outstanding debt of 170 billion VND at a 'Big 4' Bank, Can Tho branch. This business currently only has to pay an interest rate of 6.5%/year and will continue to reduce according to the bank's policy.
Mr. Nguyen Van Nhut, General Director of the company, said that since the company was established in 2006, for the past 17 years, Hoang Minh Nhat has almost only had credit relationships at this bank branch.
“In fact, many commercial banks invite us to borrow capital, they are even willing to lend on credit. The company itself has tried using the services of some other banks. But I realized that a long-term relationship with a bank will help the company gain high credit, thereby enjoying preferential interest rates as well as related procedures, especially for export companies like Hoang Minh Nhat,” said Mr. Nguyen Van Nhut.
However, Mr. Nhut said that the first important thing is that businesses must be responsible for their loans. Once they have paid their debts on time and have a good business plan, banks are ready to continue lending.
“Business has risks, we cannot eliminate them all. But for businesses, we must be responsible for the capital we borrow,” said Mr. Nhut.
In addition to suitable loan interest rates, CEO of Hoang Minh Nhat shared that businesses need to determine that the selected bank must meet quality criteria. That is to ensure quick procedures, full and timely support when businesses need it.
“From my business experience, I feel that if a business is loyal to a bank, it will be easier for the bank to prioritize it. If there are difficulties, the bank will ensure timely support,” Mr. Nhut shared.
However, he said that if the lending interest rate is over 6%/year, it will still be a burden for businesses, especially rice businesses, because the profit margin of this industry is only 1-3% of revenue. Therefore, the interest rate should only be at 4-6%/year.
“When the lending interest rate is low, the cost structure will be low, and businesses can buy rice for farmers at a slightly higher price. Of course, businesses always want to borrow at the lowest interest rate, just like when you go to the market and see people selling fish at a reduced price from 20,000 VND to 15,000 VND/kg, but you still want to pay 13,000 VND,” Mr. Nhut likened.
Currently, Hoang Minh Nhat produces 70,000 - 80,000 tons of rice per year, of which 90% of the output is exported. The company's average annual revenue is about 1,000 billion VND. Since the beginning of 2023, the company has had its interest rates reduced by the bank 3 times, with a total reduction of 1.5% per year.
Sharing with reporters, a bank credit specialist who lent to Hoang Minh Nhat said that the 6.5% interest rate is the announced interest rate, and when the support period comes, the interest rate will continue to decrease. Of course, the interest rate support must be in line with the business line of the enterprise.
Also in the Mekong Delta, Mr. Nguyen Van Hieu, the owner of a catfish farm in Kinh Cung town, Phung Hiep district, Hau Giang province, said he started his fish farming business in 2010 by borrowing capital from a joint stock commercial bank. However, since receiving a loan from a state-owned commercial bank in Hau Giang branch in 2012, for more than 10 years, he has only borrowed capital from this branch. Currently, Mr. Hieu has an outstanding debt of 15 billion VND, with an interest rate of only 5.5%/year.
“Lower interest rates, simpler loan procedures, full support from the bank, disbursement time is only 1-3 days. That is the reason why I have been loyal to only one bank for over 10 years,” said Mr. Hieu.
From just one initial pond with an area of 4,000m2, Mr. Hieu's family has now developed it into 8 ponds with a total area of more than 40,000m2, with an annual output of about 500 tons of fish.
Capital is getting cheaper, businesses are thinking about expansion
According to a survey of enterprises operating in the rice and seafood sectors in the Mekong Delta, most units are satisfied with current interest rates and lending procedures at banks.
Mr. Ly Hiep, owner of a snakehead fish and tra fish farm in Hamlet 8, Hoa An Commune, Phung Hiep District, Hau Giang Province, said that the farm has a debt of 9 billion VND at the bank with an interest rate of only 5.5%/year.
“For livestock farmers like us, being able to borrow money at a preferential interest rate is exciting. The current interest rate has decreased by 2% compared to the same period last year. That is the motivation for me to consider expanding the scale of livestock farming,” said Mr. Hiep.
Meanwhile, Mr. Tran Phuoc Hung, Director of Phuoc Hung Food Company Limited (Thoi Lai District, Can Tho City) said that his company is borrowing 45 billion VND from the bank. Since the beginning of the year, the company had to borrow capital at an interest rate of 9.5%/year, but now the interest rate has dropped to 6.5%/year.
However, Mr. Hung still hopes that lending interest rates will be lower to reduce costs for businesses, thereby offsetting the large financial costs from the beginning of the year.
"Thanks to the reduced interest rates, the company will boldly expand its production scale and invest in installing more machinery and equipment in the near future," Mr. Hung shared.
Meanwhile, on the sidelines of the Credit Conference to support enterprises in the rice and aquaculture sectors in the Mekong Delta last weekend, Mr. Pham Thai Binh, Chairman of the Board of Directors of Trung An High-Tech Agriculture Joint Stock Company, said that the enterprise currently has credit relationships with many banks such as VIB, VPBank, Sacombank and a number of foreign banks. Although he has received preferential loans, Mr. Binh said that the interest rate is still "a bit high" compared to before October 2022.
Previously, rice enterprises only borrowed at an interest rate of 6-6.5%/year. However, since the end of 2022, the interest rate has skyrocketed to 7-9%, even more than 10%/year. Currently, the lending interest rate has decreased but is still above 7%/year, while the State Bank's regulations are that rice exporting enterprises are given priority for interest rates below 5%/year.
However, Mr. Binh noted that in recent years, credit capital for businesses in the field of rice purchasing and rice export has not been lacking.
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