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Why interest rates in Vietnam is higher than other countries in the region?

The governor of the SBV said that comparing figures with some regional countries such as Myanmar, lending rates at 13% / year, Indonesia at 11.9% / year, Thailand at 6.3% Singapore is 5.4% per year, the level of lending interest in VND in Vietnam is about 6-11% per year, interest rates in foreign currency in 3-4% is still relatively reasonable. With macroeconomic correlation.

 

At the Prime Minister's Conference with the 2017 business, the governor of the State Bank of Vietnam, Le Minh Hung, said that from 2016, in the context of expectation of inflation tends to increase, demand for credit capital and issuance of government bonds continues to be at the level The high pace of disbursement of capital is still low, putting pressure on credit demand. The SBV has consistently managed appropriate measures to keep deposit rates and interest rates low. Support the production and business activities of enterprises but at the same time to ensure the objectives of controlling inflation, stabilizing the money market and foreign exchange. Mobilization and lending interest rates have stabilized from 2016 to present, especially since the end of September 2016, some credit institutions have decreased by 0.3-0.5 percentage points per annum. 5-1% pa Interest rates on business and priority sectors.

Thus, the interest rate level has fallen sharply (only 40% of the interest rate at the end of 2011), in line with the objectives of management, currency movements and inflation, while ensuring harmonization of interests of people. Deposit - Credit institutions and borrowers.

Some countries in the region (such as Japan, China) have low interest rates because: (i) inflation is kept low, macroeconomic stability; (Ii) Ability to forecast and plan production and business plans of enterprises; (Iii) Business activities of an enterprise are not overly dependent on bank credit.

Meanwhile, Vietnam is a developing country, demand for capital for production and business and socio-economic development of all economic sectors are high, macroeconomic fundamentally stable, but The major balances of the economy are not really sustainable, the inflation expectations are still high and fluctuate, the bad debt processing is difficult and the stock market and the bond market have not developed synchronously. This leads to the demand for capital of enterprises as well as capital for economic development depends heavily on the banking system. These factors have influenced the lending interest rates of CIs.

However, comparing figures with some regional countries such as Myanmar, lending rates at 13% per annum, Indonesia at 11.9% per annum, Thailand at 6.3% per annum and Singapore at 5%. , 4% / year, Vietnam's VND lending rate is currently around 6-11% / year, interest rates in foreign currencies in 3-4% / year are still relatively reasonable with correlation macroeconomic.

Resolution No. 24/2016 / QH14 of the National Assembly on November 8, 2016 instructed the banking sector to strive to reduce the average domestic lending rate by 2020 to be competitive against the lending interest rate. Average in the ASEAN-4.

In the coming time, the SBV will continue to closely monitor the macroeconomic and monetary movements in order to manage stable interest rates in line with inflation control objectives; Continuing to instruct CIs to reduce costs and improve production and business efficiency in order to reduce lending interest rates; Particular attention is paid to preferential interest rates for priority sector enterprises, SMEs, start-up enterprises, enterprises investing in high-tech science, enterprises operating effectively and competing products. Be on the international market.

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