Capital mobilization in Vietnam diversifies amid new conditions

(VOVWORLD) - Due to the Fourth Industrial Revolution and the coronavirus pandemic, capital mobilization for production and trading is a vital issue for businesses. Vietnam has implemented policies to help businesses reduce operating costs and secure sufficient capital.
Capital mobilization in Vietnam diversifies amid new conditions - ảnh 1(Photo: VOV)

Le Ha Minh, Director of the Eco Garment Vietnam Company, which makes apparel and fashion products, says the COVID-19 epidemic had a negative impact on the company’s capital resources.

The outbreak of COVID-19 led to a decline in sales, and the effort to keep employees has severely affected the business’s cash flow, said Minh.  

According to Minh, “Businesses mainly get capital from credit institutions and banks. Although Vietnam's credit sources are abundant, it’s difficult to get a loan because of the lenders’ strict requirements and conditions. Normally, the banks’ standards are very difficult for us to meet."

Obtaining capital is a headache for many businesses, especially small and medium-sized enterprises.

Over the past 5 years, new forms of capital mobilization and financing have come to Vietnam, including Fintech, peer-to-peer (P2P) lending, crowdfunding, and supply chain financing. But businesses have mainly borrowed capital from commercial banks, leading to high debt repayment pressure and lower profitability.

According to economists, to diversify capitalization, businesses need to improve corporate management and increase their competitiveness and efficiency.

Banking and finance expert Dr. Can Van Luc said Vietnam’s capital market size is quite small compared to many other countries in the region.

He advised enterprises to be transparent in their operations and financial statements, increase their understanding of finance-credit, guarantees, and business support policies, and participate in value chains with domestic and foreign enterprises.

To diversify capital mobilization, says Luc, a more comprehensive legal infrastructure is needed, and policies and solutions should support simpler credit, finance, tax exemption, and cost reduction procedures.

“Support packages should be re-designed to match enterprises’ needs. For example, businesses found it hard to take advantage of last year’s Social Security package worth 700 million USD offering loans at 0% interest. The process of applying for loans should be streamlined. Policies should be coordinated to address businesses' requests for debt deferral or reduction. It’s also important to use IT to improve procedures,” said Luc.

 The credit market is under great pressure to provide short-term capital for businesses and medium and long-term capital for the economy.

The stock market could be an effective channel for mobilizing capital, ensuring the sustainable development of the financial market, correcting the imbalance between the credit market and the capital market, stabilizing the macro-economy, and improving the competitiveness of the business community.