Current high interest rates are considered a heavy burden on the business world, especially for the Small and Medium Enterprise (SME) sector, which dominates over 98% of the business landscape in Vietnam. Although the government has urged banks to ease interest rates, business actors report that the policy has not been fully felt on the ground, with loan interest burdens still ranging between 14-15% per year.
For manufacturing and exporting sectors, this challenge is even more complex as they require substantial capital to maintain long production cycles. Industry representatives from the wood and furniture sectors emphasized that without more specific credit mechanisms for business actors with good real cash flow, they will continue to be strangled by high operational costs that erode profit margins.
This situation creates an economic paradox where high deposit rates distort entrepreneurial motivation. Many business owners are now considering withdrawing capital from the production sector and opting to keep funds in banks as a much safer option with minimal risk, rather than facing market uncertainty with increasingly thin profit margins.
Entrepreneurs are urging monetary authorities to immediately implement more affordable medium and long-term credit packages. Furthermore, excessive dependence on bank credit is seen as needing urgent reduction by strengthening capital markets, such as the stock market and corporate bonds, so that the burden of economic financing does not rest solely on the banking system.
Concrete support through access to competitive capital is viewed as a key element for the private sector to continue innovating and contributing to national economic growth targets. Without adjusting the cost of capital to a more rational level, concerns over investment stagnation among small and medium entrepreneurs are expected to persist.
