Financial leasing is a useful solution for small and medium-sized enterprises and startups that lack collateral for bank loans. At present, the country has only 11 financial leasing companies, most of which operate ineffectively.
Financial leasing is a form of medium- and long-term credit used to lease fixed assets to businesses, such as production machinery and equipment or vehicles… Businesses without sufficient capital to invest in assets can approach a financial leasing company and ask it to purchase the assets for them to lease.
For financial leasing to become widespread, leasing companies must do more than provide financial services; they need a certain understanding of the technology market. They must be able to advise businesses, assess and select equipment, so they need connections with equipment suppliers and production-technology consultants. This gives businesses advice when choosing financial leasing and reduces the risk of selecting the wrong technology.
Before deciding to lease an asset, a business must analyze the benefits and costs of financial leasing within its production and business investment plan. Leasing avoids an initial capital outlay, but lease payments are usually higher than the cost of buying the asset outright. It is therefore necessary to assess whether the business plan can generate enough revenue to ensure cash flow for lease payments.
Financial leasing is a major solution to capital difficulties for small and medium-sized enterprises. It is widely used worldwide but remains very limited in Vietnam because leasing companies lack knowledge of technology markets and therefore do not adequately advise businesses or appraise the assets they wish to lease.
In addition, businesses do not clearly understand this form of credit, so they rarely consider it in their business plans. Meanwhile, current mechanisms and policies governing financial leasing remain incomplete, posing many risks to both lessees and lessors when disputes arise, particularly the criminalization of borrowing and lending activities.
For financial leasing to become widely used in Vietnam, mechanisms and policies should protect both lessees and lessors without criminalizing borrowing–lending relationships. At the same time, authorities should be bolder in licensing joint ventures between domestic credit institutions and professional foreign financial leasing organizations.
This helps domestic financial leasing organizations learn and gradually professionalize operations. Treat them as the core providers of advice and information about this form of credit, helping businesses see its convenience and confidently use it.
Without developing financial leasing credit, it will be very difficult to find an effective solution to SMEs’ current capital needs. Many solutions have been implemented, such as credit guarantee funds for SMEs and connecting banks with businesses…, but have not yet produced significant results.
