KASIKORNBANK widens SMEs support in Viet Nam
10:40 | 31/03/2018
VGP - Aligning with the government target to achieve 1 million SMEs by 2020, Thai-Based Kasikorn Bank together with Agency for Enterprise Development (AED), Ministry of Planning and Investment brings perspective to Viet Nam’s SMEs Development by co-organizing a seminar with the title of “Holistic Empowerment of SMEs: How public and Private Sectors can join hands to develop SMEs landscape”.

Vice Minister of Planning and Investment Nguyen Van Hieu (5th from left) and participants to the seminar themed "Holistic Empowerment of SMEs: How public and Private Sectors can join hands to develop SMEs landscape”.

The main objective of the seminar is to seek for effective partnership between the government and private sectors to enable a sustainable financial ecosystem for SMEs in Viet Nam by leveraging Thailand’s SME development approach as the case study.

Mr. Pattarapong Kanhasuwan, Senior Executive Vice President of KASIKORNBANK (KBank)  said “Thai government is known to strongly encourage the growth of SME sector since the early 1990s,  Kasikornbank with its sustainable and effective financing model  has been a part in the development sector since then ”.

A representative of AED said Vietnamese SMEs account for a majority (over 97%) of the total number of enterprises in the economy; the SME sector plays an important role in creating jobs and income for laborers, mobilizing social resources for development investment and contributing to the state budget.

Accessing to finance for SMEs is still one of the most challenges for SMEs today in Asia and Vietnam. SMEs’ outstanding loans for an average of 22-25% of total outstanding loans for the whole economy during 2012-2017. According to many experts, only about 30% of SMEs have access to bank credit, nearly 70% of SMEs have to continue using their own funds or borrow from other sources of funds with higher costs and risks.

“In order to improve access to finance for SMEs, it requires more effective and standardized solutions for both credit institutions and SMEs. First and foremost, there should be a mechanism for sharing information among stakeholders, including tax authorities, business registries, bank credit information, thereby helping credit institutions and SMEs to share transparent information which in turn serves better for SME credit rating”, said  Ms. Bui Thu Thuy, Deputy Director General of AED.

Mr. Suwanchai Lohawatanakul, Director General, Thai Office of SME Promotion stated that strengthening Thai SMEs to be the primary driving force of the Thai Economy is one of the key  goals of the government. By 2021, the SME sector is targeted to contribute up to 50% of the country’s GDP. Therefore, focusing on creating the ecosystem and developing the capacity of SME are necessities so that SMEs can run business operations with efficiency, creativity and innovation.

"Financial accessibility is one of the most important tools for SMEs to continue and grow up their business, and we should not fear and focus only the NPL ratio, once we want to promote SME" said by Wichet Worakul, Senior Executive Vice President, Thai Credit Guarantee Corporation (TCG). Instead, TCG implements loss-sharing scheme to work with commercial banks to control the NPL ratio at acceptable level. Therefore, TCG now accounts for 9% of total SME's loan in Thailand.  

Mr. Pattarapong Kanhasuwan, Senior Executive Vice President of KASIKORNBANK (KBank)  said “Thai government is known to strongly encourage the growth of SME sector since the early 1990s,  Kasikornbank with its sustainable and effective financing model  has been a part in the development sector since then”.

He also pointed out that customer understanding and product innovation are the keys to stay ahead of the game. Therefore, Kbank is the first bank to put the SMEs sector into its core business, to empower SME development and has built a success story from this underserved sector.

Reviewing various international experiences in SME development and current status of Vietnam SME’s access to finance; Dr. Can Van Luc, Chief Economist of BIDV, has indicated various forms of financing for SMEs, which include those are not often used by Vietnamese SMEs such as issuing stocks or bonds, financial leasing, and suppliers’ credit.

He also pointed that SME credit in Vietnam was about 22% of the total loans for SMEs, higher than the Asia Pacific average (18.7%), Malaysia (20%), India and Russia (only 8%), but still lower than Thailand (30%), the Republic of Korea (36%) and China (37%).

He also made several policy recommendations including some key ones: (i) the by-law guidelines for implementing the Law on Supporting SMEs should be soon issued and effectively implemented, (ii) stronger measures to improve business and investment climate (especially tax and customs procedures, logistics, licensing and bankruptcy procedures), (iii) to enhance the role of SME associations and collaboration between credit institutions and credit guarantee funds, (iv) more proper design of products and services suited to SMEs by credit institutions, (v) more support in training, corporate governance advice, financial management and literacy for SMEs.

At the same time, SMEs should also improve themselves in transparency, information disclosure, willingness to work with credit institutions, and corporate governance and strategic as well as financial management.

Kasikorn Bank (KBank) has been established for 72 years already, and they are now the fourth-largest commercial bank in Thailand in terms of assets. Right now, they also implement AEC+3 strategy aiming for a regional connectivity strategy through the expansion of our network in the AEC region, plus Japan, China, and the Republic of Korea. They have established two representative offices in Viet Nam, one in Ha Noi and another one in Ho Chi Minh City.

KBank is known as number 1 SMEs bank in Thailand, and they are willing to share technologies and expertise for Viet Nam’s SME development for both credit and non-credit.

The ultimate goal of KBank in Viet Nam is to open a branch, so that they can contribute more in the form of providing both credit and supporting investment, especially for FDIs from Thailand to Viet Nam./.

 

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