The cost of borrowing in Vietnam is making life difficult for the country's exporters, who are finding it increasingly difficult to obtain credit lines and letters of credit (L/Cs).

The credit squeeze is largely blamed on policies of the government as it tries to rein in runaway inflation.

Austerity measures

Vietnam has introduced several austerity measures and tightened monetary policy in its endeavours to curb inflation, which is currently running at the rate of 25 per cent a year.

But concerns are being expressed in several quarters that these policies are denting the country's international trade prospects.

No L/Cs

One local politician is asking the authorities to make sure that exporters have access to the financing they need to do business.

Deputy Nguyen Van Thoi from Thai Nguyen Province says exporters in his province could not get bank loans or open L/Cs to make international payments.

Further concerns

He has however pressed this case with State Bank of Vietnam's Governor Nguyen Van Giau, who has promised to look carefully at how measures used to curb inflation impact on exporters.

Some exporters are concerned that the government will introduce even more severe austerity measures such as a 30 per cent credit cap.

Giau however has reassured exporters that credit lending at commercial banks would continue to focus on exports, manufacturers, investments in rural areas, farming and farmers.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.