Vietnam Government Orders Halt to Lending to 'Backyard Businesses,' Boosts SME Support

The Vietnamese government has issued directives to cease concentrated lending to specific corporate groups, often referred to as 'sân sau' (backyard businesses). This measure aims to maintain the soundness of the financial system and enhance capital flow, particularly to small and medium-sized enterprises (SMEs). This directive is part of a broader scheme approved by the Prime Minister on September 18, 2026, titled 'Continue Modernizing the Banking System, Handling Weak Credit Institutions, and Enhancing Access to Capital for Enterprises, Especially SMEs.' The plan also seeks to create a foundation for banks to effectively apply Artificial Intelligence (AI). In financial markets, banking and energy stocks have been leading the charge, with the VN-Index rising by over 22 points. Furthermore, there is a growing focus on green finance, and banks like SHB and Sacombank have proactively reduced lending interest rates by 2% to support businesses. Vietnam, under its one-party system, has sustained high economic growth. However, for this growth to be sustainable, stabilizing the financial system and ensuring equitable capital distribution to a wider range of businesses are crucial. The government's latest directive signals its commitment to increasing economic transparency and integrity, aiming for long-term development.