Hanoi (VNS/VNA) - Nine years after the issuance of a Government decisionthat set out preferential credit policies to provide more financialsupport for Vietnamese firms in the supporting industry, few have beenable to make use of said policies, industry insiders have said.

Tran Thi Thu Trang, director-general of Hanel PT, an electronics maker innorthern province Bac Ninh said her company had given up on seeking access tothe preferential credit policies after extensive research.

Trang said it was extremely difficult to meet Government criteria forpreferential credit, even for HanelPT, a relatively well-known name among Vietnam’selectronics makers with more than 20 years in the industry, as policies tend tofavour newly-established firms over existing ones.

“Of course, we can always go to the bank but interest rate hikes in recentyears scare us. Without support from the Government, firms will be reluctant totake big leaps in infrastructure investments”, she said.

“It has translated to lost opportunities. We have turned away a number of largeorders, the kind of orders that could help us break out and transform our firmbecause we would need to expand our production capacity by five to 10 times,which was nearly impossible to achieve on our own,” said Trang.

Some Vietnamese firms have been forced to sell out to foreign buyers becausethey were unable to cope with the financial pressure, especially after havingto make large investments in infrastructure and machinery to stay competitive.

Realising the difficulties firms in the supporting industry have been facing,in a report sent to the Government the Department of Industry under theMinistry of Industry and Trade has pointed out that supporting industry firmsare in dire need of capital to invest in factories, technology and humanresources.

The department said current policies provide little or no support to firms, whooften have to borrow from commercial banks at higher rates due to theircapital-intensive and labour-intensive nature, which makes it difficultfor them to balance costs and efficiency.

Small-to-medium sized enterprises (SMEs) were shunned even more in currentregulations, which requires them to put down a deposit equivalent to 15 percentof the loan amount. This is difficult and impractical for most SMEs due totheir small size and limited finance.

In addition, firms must go to the Vietnam Development Bank (VDB), whosenetwork of offices and support staff is somewhat limited to large cities, toapply for preferential loans. The department advised that commercials banksshould also be included to provide firms with preferential loans. It saidcommercial banks, with their extensive networks and expertise, will help notonly reduce the strain on VDB but also better assess firms' abilityto perform and pay their loans./.