In an interview with The Saigon Times, Do Thien Anh Tuan, a lecturer at Fulbright School of Public Policy and Management, said that whether interest rates are high or low should be determined by real interest rates, i.e. the inflation-adjusted rate, and the average rate of return in sectors. He also gave some suggestions for businesses to access stable “cheap money” in the long term. THE CURRENT PARADOX The Saigon Times: Since the end of 2023, increasing amounts of deposits have continued to flow into banks despite interest rate cuts. Banks have been sitting on mountains of idle money but the majority of them have recorded huge profits. Should this reality be seen as a paradox and what are issues Vietnam’s financial and credit market is facing? Do Thien Anh Tuan: The higher profit margin in the banking sector than the economy’s average is not unusual. This has been seen during the Covid-19 pandemic period and even now amidst economic difficulties. Simply put, even if the economy slows down and businesses halt operations, they still have to repay bank loans. The Government and the State Bank of Vietnam (SBV) have implemented some policies to support businesses such as debt rescheduling […]
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