Local businesses are still decrying the sky-high lending rates for their old loans despite the central bank’s recent promise to push the borrowing costs down from July 15 to prop up the struggling economy.

Many business executives complained to the Daily that banks have only announced lending rate cuts and credit packages for new loans while they are still maintaining high rates on old loans for local corporate borrowers.

Nguyen Tri Kien, general director of Minh Tien Bag Manufacturing Co., said his firm owed the Binh Tay branch of Sacombank some VND2 billion with an annual rate of 20% which has stayed put since early this year. Kien said his company had repeatedly requested the branch to revise down the rate but has yet to receive any response from the lender.

With the exorbitant rate, the interest after just a few years will be equivalent to the loan’s principal, making it more difficult for Kien’s company to repay the loan. Kien said he had heard much about the lending rate cuts as regulated by the central bank but his company is still unable to access the soft loans.

Therefore, he said he intended to borrow money from another bank to pay this loan as his firm finds the current lending rate unaffordable.

Likewise, Tan Ky Nguyen JSC, which specializes in construction material production, had been charged with a steep rate for the whole year of 2011 for a loan of VND37 billion. The rate is still fixed at over 18% per annum as of now, the firm’s general director Phan Hoai Thanh lamented.

Normally, local banks will revise the lending rate every three months but local companies have received no notice from the lenders relating to interest rate cuts for their loans since early this year.

Thanh said it is unlikely that his enterprise will be given low-interest loans despite central bank’s recent instruction that banks must lower lending rates for old loans to below 15% a year from next Sunday. “There is nothing we can do if local lenders refuse to revise down lending rates,” Thanh stressed.

Huu Lien A Chau, a big steelmaker in the steel industry, is also facing the same woe, with the bank loans of the company still imposed with lending rates of more than 17% annually. It is lucky that the rate now has dipped by some 1.5 percentage points from that in the year’s beginning, general director Phan Van Dung said.

Dung, however, complained that with such a high lending rate, his firm will be just able to earn enough money to service the loan.

Dung pinned high hopes on a better outlook of the economy as the Government has agreed to boost public investment again which is expected to save cashed-strapped producers from ballooning inventories.

But he insisted whether credit institutions slash interest rates or not is unknown and that his enterprise never dares to ask them for a lower rate.

The Saigon Times Daily