Under the Circular 07/2016/TT-NHNN, which came into effect from June 1, commercial banks can provide short-term loans in foreign currency for export firms which need funds for production.
After getting the loans, exporters must immediately sell the amount of foreign currency borrowed to the lending institutions under the spot forex trading method, except in case the foreign currency will be used to make payments.
This decision will remain in effect until December 31 this year.
Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) that had requested the SBV to extend the foreign currency loans in early April, said the decision to issue the circular was timely and proper.
Since the operation was banned on March 31, seafood enterprises lost the chance to borrow foreign currency at low interest rates, Hoe said.
Over the past two months, firms had been worried about their source of capital and they had complained about the rise of capital costs and narrowed profits as they had to borrow loans in Dong at much higher interest rates, he added.
The interest rate for a three-month foreign currency loan is currently popular at 3% per year while the rates of local currency loans range between 8% and 11% per year.
Nguyen Hai Nam, deputy chairman of the Vietnam Coffee and Cocoa Association, said it was essential for the enterprises to access cheap funding through foreign currency loans because agricultural and fisheries industries needed a large amount of capital to purchase materials.
Over the past few years, foreign companies had taken advantage of cheap capital by borrowing from banks in foreign countries and then converted it to Vietnam Dong to buy materials in local markets.
Therefore, if local companies were not allowed to borrow foreign currency, they would lose in their own backyard and they would be unable to compete with foreign rivals.
Nguyen Hoang Minh, deputy director of the SBV’s HCM City branch, said, at present, foreign invested companies were enjoying low lending interest rates.
Under the situation, local exporters needed to be facilitated to improve competitiveness and boost exports, Minh said.
Nguyen Duc Huong, standing deputy chairman of the Lien Viet Post Join Stock Commercial Bank (LienVietPostBank), said the new regulation not only benefitted exporters, but also helped ease the pressure on commercial banks to cut interest rates for đồng loans.