Unsecured loan opens the knot of technical infrastructure investment capital
Congressman Phan Van Quy of the delegation of National Assembly’s members
Dear Sir, there are many areas that need unsecured loans, why do you only refer to the unsecured loan for the construction of technical infrastructure?
In the 2011 – 2012 economic development strategy, our Party and State have identified the synchronous infrastructure system construction is a strategic breakthrough. In which, the technical infrastructure construction is one of the specific objectives to accomplish this breakthrough.
To perform the synchronous technical infrastructure construction, many resources require to be mobilized, including financial resources. However, the difficulties in funding are a barrier to the economic sectors to invest in the field. Therefore, I suggest that we need a mechanism to unfreeze, regulate reasonably the cash flow, in which, the unsecured loan is the key to open the knot of capital and one of the important solutions to contribute to attract the technical infrastructure construction investment from the different economic sectors.
The unsecured loan for the technical infrastructure construction is to contribute to the successful implementation of the strategic breakthrough of infrastructure identified by our Party and State already.
The unsecured loan is one of the solutions to unfreeze the capital flow, how does this have the meaning our Statee budget, Dear Sir?
Currently, for the technical infrastructure construction investment, in addition to the budget funds, the State also mobilizes capital from various sources by issuing bonds, foreign loans...
However, these methods result in increase of public debts. Expectably, the peak national debt will reach 64.9% of GDP in 2016, while public debt ceiling level that we are controlling does not exceed 65% of GDP. In front of such fact, the State has been implementing a strong mobilization policy of social resources, ensuring benefits to attract the investors of all economic sectors to develop the infrastructure in order to reduce public investment and decrease public debt. The unsecured loan will be one of the solutions to help implementing this policy.
As your judgment, is the status of "extra money for banks, insufficient capital for enterprises" improved as the banks provide unsecured loan?
When providing unsecured loans, the bank will liberate the funds raised, increase credit balance, create stable income, reduce bad debt ratio and facilitate the banking sector restructuring.
Currently, in addition to a number of State enterprises, the unsecured lending to other economic sectors is a strange problem. Many enterprises have conditions to expand their production and business activities, desire to invest in much high feasible technical infrastructure projects, but can not get loan because collaterals are no longer. Therefore, I think that the unsecure loan will help circulating the cash flow in the bank, and the status of "extra money for banks, insufficient capital for enterprises" will be significantly improved.
If the knot of unsecure loan is removed, does it create a huge boost to the enterprises participating in large projects, Dear Sir?
Currently, the infrastructure, works projects require large capital, while the Vietnamese enterprises, even great ones can not simultaneously meet the needs of capital for many projects. Due to lack of funds, many projects in the country have fallen into the hands of foreign companies meanwhile the domestic enterprises can fully realize.
In the context of increasingly deeper integration, the opening of credit knot for the enterprises will help domestic ones to have competitive conditions against the foreign investors. Strengthening unsecured lending to the enterprises having conditions to deploy the large technical infrastructure projects will help the domestic enterprises growing, increasing the competitiveness, confirming their prestige and brand when joining the regional and international integration, as the basis for building the national brand.
Unsecured loan – The enterprise needs, the bank desires. So why has this knot been removed?
Since 2006, we have had unsecured loan policies for the poor individuals, families as provided in the Decree No. 163/2006/ND-CP dated December 29th, 2006 on secured transactions. Accordingly, the poor individuals, households are secured by the trust of the political - social organizations to borrow money from the credit institutions serving the production, business, services, and to contribute to ensure the social security.
At present, in the agricultural field, the State Bank has also been implementing the unsecured loan program as stipulated in the Decree No. 55/2015/ND-CP on credit policies in service of agricultural, rural development. This program has achieved initial results, contributing to the agricultural sector restructuring in connection with new rural area construction and gradually improving the people's life.
For other sectors and industries, the Prime Minister issued the Directive No. 11/CT-TTg dated May 21st, 2014 and Directive No. 25/CT-TTg dated August 13th, 2014, the State Bank’s Governor also has promulgated the Document No. 5342/NHNN/TTGSNH dated July 24th, 2014, encouraging the credit institutions to strengthen unsecured loan, but in fact, the credit institutions are still afraid to extend unsecured loan. This is, in the one part, caused by the unclear and incomplete provisions of the current laws, in the other part, by lack of appropriate approach of the banks and enterprises.
So which is the solution to remove the knot of unsecured loan in service of the technical infrastructure construction, Dear Sir?
The investment in infrastructure requires huge funds whose recoverability of capital is very long, but now the State has no regulations on unsecured loan to invest in the technical infrastructure development. If the enterprise has a healthy financial situation, feasible business plan, the lending bank has a close cash management method, when providing unsecured loan for the technical infrastructure work construction investment, the bank will no longer fear the risk that this is really an effective solution for the State, banks and enterprises.
Therefore, in order to facilitate the enterprises to access to the credit capital source from unsecured loan for investing in construction of technical infrastructure works, I think the need to deploy synchronously multiple solutions. In particular, it should review the relevant legislation, to modify as appropriate in order to create a clear, consistent and complete legal framework in the unsecured loan field.
Moreover, several pilot groups of important, effective project, works need to be applied for unsecured loans, from that, we have a basis for evaluating the effectiveness and replicating the model. On the client and commerical bank sides, externally both who strengthen professional ethics should require appropriate approaches, build trust, towards the unsecured loan criteria in accordance with the international practices, such as: the unsecured loan customer must have a high reputation, have a highly feasible business plan, a healthy financial situation, staff stability, especially high-level personnel. In addition to the enterprise’s credibility evaluation system, before lending, the bank also requires strict the cash flow management method for each loan.
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