A credit growth slowdown and stagnant production have posed challenges for the economy in the first quarter, economic administrators said at a meeting held in Hanoi on Tuesday by the Ministry of Planning and Investment.
Nguyen Hoang Minh, deputy director of the HCMC Department of Planning and Investment, said the city recorded credit growth of a mere 0.26% over late 2012, while bad debt stood at 5.9%.
The city is struggling with 14,500 unsold condominiums, including 12,200 under construction, worth more than VND24 trillion. The city government has asked banks to extend home loans to State employees but the situation has not improved.
So far, over 4,500 businesses in HCMC have halted operations, equivalent to 90% of the number of new business startups. Enterprises complain about sky-high lending rates of 14-15%, said Minh.
Nguyen Thanh Long, deputy director of the planning department of Haiphong, said the index of industrial production in the city had only risen 1.7% in the first quarter, which he found surprising because Haiphong is an industrial city.
Several production facilities, especially shipyards, have been inactive since the year’s beginning. Ports have seen a drop of 2.75% in cargo throughput.
“Large numbers of workers have left industry and returned to agriculture,” he said.
Trinh Huu Thang, director of the planning department of Bac Giang, said producers of cement and building materials in the province were coping with increasingly high inventory and poor consumption.
“Many factories have stopped production. The textile-garment sector often secured a substantial volume of orders in previous years, but now there will be no orders left to fulfill by the end of the second quarter,” he said.
He said banks in Bac Giang had VND2-3 trillion available, but they could not find borrowers. The banks there have posted a 1.3% decline in credit.
“Our checks show lending rates are hovering around 14% a year,” he said.
According to the planning ministry, GDP growth in the first quarter is estimated at 4.89%, higher than the 4.75% in the first quarter of 2012. Only the service sector has achieved higher growth than the year-ago figure.
Pham Xuan Hoe, deputy head of the Monetary Policy Department under the central bank, put credit growth of the entire banking system in the first quarter at 0.03%. “Credit has inched up but low-interest loans still cannot find borrowers,” he stressed.
He said 93.6% of banks’ capital had been lent to producers, meaning only 7% had gone to bonds and financial products.
Of the total outstanding loans of nearly VND2,800 trillion, only VND400 trillion has been poured into State groups and corporations, he noted.
Deputy Minister of Planning and Investment Dang Huy Dong said: “Many people say that the central bank has done well in ensuring the system’s safety. It accomplishes the intra-industry task, but does not provide funds for the economy.”
He questioned: “Banks say they have set aside VND30 trillion to save the tra fish industry, but the Mekong Delta provinces say they have not done so. So, what has actually happened?”
However, a representative of the central bank said he did not know about this case and promised to send a report later.