Financial leasing – measures to solve the difficulty in capital for small and medium enterprises in Vietnam
INTERNATIONAL CONFERENCE: DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES
IN VIETNAM IN THE CONTEXT OF INDUSTRIAL REVOLUTION 4.0
FINANCIAL LEASING – MEASURES TO SOLVE THE DIFFICULTY IN
CAPITAL FOR SMALL AND MEDIUM ENTERPRISES IN VIETNAM
Nguyen Trong Nghia,
University of Finance and Business Administration
Abstract:
The objective of this paper is to assess the situation of capital mobilization of small and
medium-sized enterprises (SMEs). The type of business accounts for a large proportion (97%) of
the total number of businesses in Vietnam. However, this enterprise always faces many
difficulties due to the discrimination between state owned enterprizes and private enterprises.
Especially it is difficult to mobilize, access to loans of commercial banks. The establishment of a
financial leasing company is a solution to help SMEs solve these difficulties. Therefore, the
article provides solutions to help SMEs to increase access and mobilize capital through financial
leasing companies.
Key words: SMEs, financial leasing, financial leasing companies
Tóm tắt:
Mục tiêu của bài viết nhằm đánh giá thực trạng huy động vốn của doanh nghiệp nhỏ và
vừa (DNNVV). Loại hình doanh nghiệp chiếm tỷ trọng lớn (97%) trong tổng số doanh nghiệp
của Việt Nam. Tuy nhiêm, doanh nghiệp này luôn đối mặt nhiều khó khăn do có sự phân biệt đối
xử giữa doanh nghiệp và doanh nghiệp tư nhân. Đặc biệt khó kahwn về huy động, tiếp cận
nguồn vốn vay của ngân hàng thưng mại. Việc ra đời công ty cho thuê tài chính là giải pháp
giúp DNNVV giải quyết những khó khăn trên. Do vậy, bài viết đưa ra các nhóm giải pháp giúp
DNNNVV tăng cường tiếp cận và huy động nguồn vốn thông qua các công ty cho thuê tài chính.
Từ khóa: DNNVV, thuê tài chính, công ty cho thuê tài chính
In Vietnam, the number of small and medium-sized enterprises (SMEs) accounts for 97%
of the total number of businesses, which is the region with the fastest growth rate and creating
many jobs for society. Although playing an important role in the economy, SMEs currently face
many difficulties in production and business activities, especially lack of capital, which has been
a difficult problem for many years for SMEs. . Therefore, the issue of capital mobilization and
optimization of capital structure to improve the efficiency of capital mobilization is always a top
priority for SMEs.
1. Actual situation of SME capital mobilization.
SMEs have some internal limitations and weaknesses that negatively affect their ability
to mobilize capital, such as: business management qualifications, unqualified enterprise values,
standards, and high risks , inadequate information leads to low reputation and creditworthiness
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DOANH NGHIỆP NHỎ VÀ VỪA CỦA VIỆT NAM TRONG BỐI CẢNH CUỘC CÁCH MẠNG CÔNG NGHIỆP 4.0
of the business. SMEs lack medium and long term plans, lack of competitive strategy, long term
development strategy. Lack and weak of the most important resources: Capital, materials,
technological equipment, management strategies, and markets. SME loans often have a high
level of risk, so the bank's lending conditions and credit incentives for SMEs are tightened, for
example: Requirements for collateral, appraisal process projects, credit limits, loan terms,
interest rates, ... are strictly guaranteed. Therefore, it has caused more difficulties for SMEs in
raising capital. In addition to the internal causes of SMEs, there are also external causes, limiting
the ability of SMEs to mobilize capital, such as: limited size of financial market capital, lack of
financial resources. to uneven allocation of resources, failing to meet the capital needs of all
businesses. That inevitably leads to large-scale enterprises, strong financial potential, good
corporate governance, transparent financial statements, high credit rating, low risk, etc.
However, there will be more opportunities to access and raise capital than SMEs. At the same
time, the financial system is incomplete, lacking professional financial institutions and
institutions to provide and finance capital exclusively for SMEs, thus, the ability of SMEs to
raise capital is increasingly difficult, affects development both in size and quality.
SMEs operate based on the main sources of capital: equity capital, loans from
commercial banks, loans through financial leasing channels, capital mobilized through the stock
market. In the above-mentioned capital mobilization channels, because the size of equity of
SMEs only accounts for a small proportion of the total operating capital, it is evident that the
capital of SMEs production and business activities must depend primarily on to external sources,
especially loans. According to a survey of the Ministry of Planning and Investment (2017), the
equity capital of SMEs is very limited, SMEs with capital of less than VND 1 billion account for
nearly 50%, nearly 75% of SMEs have capital of less than 02. Billion.
For loans from commercial banks, SMEs are difficult to access due to many reasons,
including an important reason stemming from the limitations of equity capital of SMEs.
Normally, banks only provide credit to about 50% of the assets of the business, because the bank
always requires the number of collaterals in the worst case, when the business is insolvent, the
bank can recover capital through sale of assets of the enterprise. According to statistics of the
Vietnam Chamber of Commerce and Industry in 2018, about 75% of businesses in Vietnam have
a need to borrow capital from a bank, but not all businesses have access to this capital. Reports
of the Vietnam Development Bank and commercial banks show that the number of SMEs
guaranteed for loans in the past period is very small. Many businesses think that the current loan
procedure is difficult to access, even when there is a preferential policy of the Government, these
enterprises are difficult to access credit capital.
For long-term capital mobilized in the stock market (including stocks and bonds), the
channel to mobilize loans through issuing corporate bonds is also a research channel. But
according to the Government's Decree No. 163/2018 / ND-CP of December 4, 2018, on
corporate bond issuance, SMEs are almost unable to meet the requirements set out in this
Decree. Therefore, bond issuance is a difficult door for SMEs to open.
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INTERNATIONAL CONFERENCE: DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES
IN VIETNAM IN THE CONTEXT OF INDUSTRIAL REVOLUTION 4.0
In addition, there are many investment funds in Vietnam, but businesses still do not have
access because very few SMEs have built feasible plans and specific, practical and effective
operation plans. , so often the proposed options are difficult to accept investment funds.
Investment funds are often willing to fund businesses, but under strict conditions such as:
controlling enterprises (financial control, operations, sending people to the management board to
manage enterprises together;
2. Financial leasing for SMEs.
Currently, in Vietnam according to the Government's Decree No. 39/2014 / ND-CP dated
May 7, 2014 on the operation of financial companies and financial leasing companies, the forms
of financial leasing Companies licensed to do business in Vietnam:
- Domestic financial leasing form: Domestic financial leasing means that the financial
leasing company representing the lessee will buy assets from domestic suppliers and sublease the
lessee according to schedule. Payment shown in the lease.
Domestic financial leasing is also a medium and long-term credit method for investment
projects on purchasing machinery, equipment, production lines and means of transport of
enterprises. When leasing finance, the tenant will choose the type of equipment, supplier or
manufacturer. Song can also negotiate directly on the purchase price, warranty and after-sales
services needed with the supplier. Based on the needs of the lessee (as shown in the contract),
the finance leasing company will buy the right type of equipment and services attached and
deliver to the user. At the end of the lease term, the lessee will be transferred the ownership of
the equipment, during the financial leasing period, the right to use the financial leasing property
will belong to the lessee and the ownership will belong to the lessor.
- Import finance leasing form: Import finance leasing is the finance leasing company
representative of the lessee buying property from foreign suppliers and subleasing the property
to the lessee according to the payment schedule. payment between the two parties (shown in the
contract).
- Form of finance leasing: buying and subleasing: Buying and subleasing in the form of
financial leasing means that the financial leasing company buys assets of the lessee and the
lessee subeases the properties This is in the form of financial leasing so that the lessee may
continue using it in service of his / her activities during the time when the lessee has financial
difficulties in paying the supplier. In the purchase and subleasing transaction, the lessee is also
the supplier of the leased asset. This is a way to invest capital to restructure capital resources for
medium and long-term businesses. Assets that the enterprise has invested and used will transfer
its ownership to the financial leasing company within a period of 02 - 05 years. Besides, this
business can be funded up to 90% of the remaining value of the device. With this special
method, businesses will be supplemented with working capital, rebalancing capital or making
new reciprocal capital for other projects, other purposes or when enterprises need working
capital for production and business. Businesses, businesses can also use this service for any
existing machinery and equipment at the business. This service enables businesses to calculate
depreciation, convert equipment into cash while still having full rights to use the device.
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DOANH NGHIỆP NHỎ VÀ VỪA CỦA VIỆT NAM TRONG BỐI CẢNH CUỘC CÁCH MẠNG CÔNG NGHIỆP 4.0
- Operating lease form: This is the form of operating lease, which is the form of lease,
whereby the enterprise uses the leased assets of the financial leasing company for a period of
time. time limit and will return the property to the lessor upon the end of the lease term. The
finance leasing company holds the ownership of the lease asset and the customer is responsible
for payment according to the lease contract.
3. Difficulties of financial leasing companies and their impact on SMEs
After more than 20 years of establishment and development in Vietnam, the scale of
financial leasing companies is still very small. Of the more than 10 operating financial leasing
companies, apart from Viettinbank leasing which owns VND 1,000 billion and BIDV - Sumi
Trust owns VND 895 billion, the remaining companies own modest capital, at less than 500.
billions dong. Despite the potential for growth, the number and scale of financial leasing
companies in Vietnam is still limited by the following reasons:
According to the State Bank's regulations, financial leasing companies are credit
institutions, so they can only accept deposits or borrow money from commercial banks with
terms of less than 365 days. Meanwhile, these companies finance medium- and long-term loans,
so the capital is somewhat limited.
On the other hand, business in the field of credit, finance leasing also cannot avoid risks.
Due to market fluctuations affecting production and business, thereby affecting financial matters,
assets of the business and of course will affect the financial leasing assets of companies.
Besides, in Vietnam, there is no formal market for buying and selling assets, which is
also one of the difficulties for financial leasing companies when handling debts. In order for
financial leasing companies to promote their role as a medium- and long-term capital supply
channel for businesses, creating conditions for SMEs to develop, the Government should have
policies to support more companies for newly established financial leasing in Vietnam, the State
calls and creates favorable conditions for foreign investors such as the US, Japan, and South
Korea to support the leasing industry.
4. Some solutions to increase capital for SMEs through financial leasing companies
In order to help channel capital from the financial leasing channel for SMEs, in addition
to overcoming investor sentiment (financial leasing companies), it is especially important for
SMEs to understand and understand. access to financial leasing, financial leasing activities must
be transparent and suitable with the market. Simple, strict and objective leasing procedures meet
the needs of SMEs.
SMEs need to improve their management capacity, qualifications and skills so they can
negotiate and sign contracts with financial leasing companies, and at the same time build up
business and production plans. In accordance with the provisions of law and high feasibility, to
create confidence for investors.
Financial leasing companies also need to be expanded both in size and financial potential,
need to diversify the fields of leasing such as factories, machines, equipment, .... At the same
time, it is also widely informing and promoting to SMEs to know and see the effectiveness of
financial leasing.
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INTERNATIONAL CONFERENCE: DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES
IN VIETNAM IN THE CONTEXT OF INDUSTRIAL REVOLUTION 4.0
The State should also have appropriate policies and regulations to create conditions for
financial leasing companies to develop, especially financial support (commercial banks lend in
large quantities). Preferential interest rate). At the same time, it also creates favorable conditions
for SMEs to access and perform financial leasing services.
References
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transparency of financial activities of enterprises‖, Financial Magazine, Vol 1 May 2019.
2. Nguyen Thi Cuc (2016), Improving loan efficiency for small and medium-sized enterprises,
Finance Magazine, May 2016.
3. Financial Times (2018), "Solutions to remove difficulties on security assets when borrowing
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4. Vu Duy Hao, Tran Minh Tuan (Editor – in chief) (2016), Business Finance Curriculum,
Publisher of National Economics University, Hanoi.
5. Phung Thanh Loan (2018), Crowdfunding – A new form of Capiatl mobilization for Small
and Medium sized enterprises (SMES) in Vietnam, The 5th IBSM International Conference
on Business, Management and Accounting, 19-21 April, Hanoi University of Industry,
Vietnam;
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