Disbursement of over JPY 10 billion by SMEFP I and II

After the first phase of the Small and Medium Enterprise Finance Program (SMEFP I) over JPY 4 billion was successfully disbursed, the second (SMEFP II) of over JPY 6 billion, funded by the Japanese government is now coming to an end. The project is evaluated as being efficient in increasing financial sources for SMEs and laying the background for project implementation during the third phase. This fund will be disbursed through the Japan Bank for International Cooperation (JBIC); moreover, the loan from the State Bank of Vietnam (SBV) will be controlled through the account of the turn-over fund.

Started in December 2006 from a loan disbursed from November 2007, SMEFP II is expected to fulfill its goals and become an effective financial momentum for SMEs. SMEFP II is adopted in two phases: the SBV plays important roles in manipulating, selecting and re-lending to financial institutions; then the financial institutions will be in charge of giving loans to SMEs.

 

The result has come for many reasons. Firstly, the project speeds up the credit allotment from financial institutions, which not only offers SMEs loans at a lower cost for medium and long term loans but also enables them to use loan-derived capital, instead of prevalent commercial loans, as a mortgage to approach other loans. Secondly, different from other projects, which have none of criteria for credit allotment and just focus on the profitability of the minor projects, SMEFP II is aimed at significant groups including businesses, manufacturing, agriculture-forest-fishery, construction, distribution, wholesale and retail, import and export, transportation, printing, infrastructure, health and education. The qualified borrower is required to meet certain criteria. Firstly, the enterprises, which must be established in accordance with the Enterprise Law, include joint-stock companies, limited companies, joint businesses, and private companies, with a registered capital of under VND 10 billion or an average number of employees under 300. Secondly, those such enterprises have more than 50 percent of non-state-owned capital. “We hope that once allocated to each SME, the capital will be effectively utilised in production and services.

 

The first phase of the project is being carried out by four main banks including BIDV, VietInbank, DAB and ACB while the second one includes more than 9 banks. Accordingly, the financial institutions at the second phase has been allowed to support around VND800 billion; up to now, disbursed loans account for VND734.4 billion, corresponding to 92.3 percent of registered loans. Generally, financial institutions have made great efforts to fulfill their disbursement aims.

 

Both financial institutions making direct disbursements and enterprises taking loans gain benefits from not only profitable capital but also a new disbursement tool, which has not been adopted in the Vietnamese financial institutions yet. 

 

For disbursement efficiency, the project has provided many technical training courses. The representative of the administration board of international credit projects of the SBV, disclosed that in the second quarter of the year 2008, there will be many training courses in Hanoi and Ho Chi Minh City, with the involvement of nearly 200 technical staff from the SBV in some areas such as the international experiences for a sponsors strategy for SMEs, focusing on credit assessment, loan control, administration and marketing system for the SME loans.

 

For more market accessibility for SMEs, financial institutions are allowed to apply flexible interest rates regardless of the normal ones. It is vital that the SMEs are facilitated to access capital by encouraging financial institutions to use loan-derived assets as the mortgage.

 

According to Nguyen Van Ich, Director of Dong A Ltd. That specialise in processing and exporting Kraft-line, Dupex paper, Tex-Kraft to the South-Eastern countries, in both phases of SMEFP, the company has been given loans for business expansion.

 

The disbursement units believe that financial institutions have learned many experiences during the process of implementing projects, which helps them to provide more credit to SMEs. Pham Huy Hung, Chairman of Vietinbank, revealed that the JBIC has recently examined collateral security through its operational systems and appraised the effectiveness and security of its loans to SMEs.