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Credit flows strongly into industrial zones

01/09/2021

Although also heavily affected by the Covid-19 pandemic, in the first months of 2021, foreign-invested enterprises still maintain production to ensure the delivery schedule for international customers. As a result, enterprises still maintains cash flow and operational efficiency, effectively affecting credit growth of banks in industrial parks - export processing zones.

Another notable statistic is that the amount of short-term loans of credit institutions in Ho Chi Minh City currently accounts for a high proportion (76.8%) of the total outstanding loans. This is also completely consistent with the practice of using working capital for production and export business of enterprises.

It can be affirmed that the bank credit flow has effectively contributed to the production and export activities of foreign-invested enterprises in the first months of the year; thereby contributing positively to the general import-export picture of the city.

According to the Ho Chi Minh City Bureau of Statistics, in the first eight months of 2021, the city's total import and export turnover of goods increased by 0.03% over the same period last year, of which exports increased by 4% and imports decreased by 2.8%. Particularly, the foreign-invested sector - the main driver of the city's import and export growth - saw an increase in export turnover of 12.6% and an increase of 11.1% in imports over the same period.

According to a number of import-export businesses, there is no shortage of export orders this year, the current financial costs are not difficult, but the implementation of social distancing under Directive 16 causes many difficulties for production activities and pushes up production costs, especially logistics costs. Therefore, enterprises hope that in the near future, when the pandemic is controlled,  exports will continue to increase in the last months of the year.

On the basis of the growth of such enterprises, it has created a driving force for the growth of bank credit in the industrial zones - export processing zones in Ho Chi Minh City. These results reflect the sustainability of credit activities of foreign banks. According to banking experts, the pandemic slows down the overall credit growth due to the weak demand of the economy, causing the credit demand of domestic enterprises to decrease accordingly. However, credit in industrial parks - export processing zones of banks still grew steadily. This adds an affirmation of the strategy of customer base development and expansion, risk management on the principle of respecting the principles of credit standards of banks in the process of capital use.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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