Bad book-keeping cuts SME credit access

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Most small and medium enterprises in Vietnam are unable to access bank loans because of their inability to present comprehensive financial documents, heard a report at a conference Thursday.


The Vietnam Chamber of Commerce and Industry (VCCI) estimated that less than 30 percent of Vietnamese SMEs are able to access bank loans. The banks themselves put the figure at around 20 percent.


Dang Van Thanh, chairman of Vietnam Association of Auditors and Accountants, said many enterprises do not maintain financial records with a compelete accounting system and accurate reports.


Nguyen Thi Huong Nga of ANZ said to get bank loans, enterprises have to pass "harsh credit barriers".


Banks will "look through" several criteria such as the enterprises' solvency and financial capacity, whether their business plans are doable, how their money rotates in the market, their profits and losses, Nga said.


SMEs account for 90 percent of enterprises in Vietnam and they should have been a fertile market for banks, she said.


Enterprises should improve their auditing and accounting systems, and think about inviting independent auditors to make reports.


An independent auditor is not mandatory for bank loans but it helps convince the lenders about the transparency of a firm's financial information, Nga said.


However, most SMEs cannot afford the services of an independent auditor, conference participants noted.


Le Thi Hong Len, representative of the UK-based Association of Chartered Certified Accountants in Vietnam, said shortcomings in Vietnam's laws and policies are also reasons why SMEs cannot get bank loans.


But while waiting for changes in laws and policies, the enterprises should also change their management, trading and financial administration, she said.

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