High interest rates hurt Vietnam steel industry

TN News

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Steel companies in Vietnam complain that borrowing interest rates of up to 19 percent annually are stifling business, an industry official said.

Pham Chi Cuong, chairman of the Vietnam Steel Association, said many businesses in the industry, from manufacturers to retailers, have been adversely affected by the high borrowing costs.

They cannot earn any profit at these rates and they are unable to operate at their full capacity, he said.

Analysts said banks are tightening credit access as credit growth had already hit 22.5 percent by October, compared to the full-year target of 25 percent.

Besides, now that banks are no longer subject to any rate cap, they are offering deposit rates of 13-15 annually.

Tran Hoang Ngan, vice president of Ho Chi Minh City Economics University, said interest rates should not remain so high for an extended period.

The rates could stymie medium and long-term projects and production, he said.

The government needs to bring interest rates in line with the country's inflation, Ngan said. If inflation, for instance, is 10 percent, lending rates should only be 15-16 percent.

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