The State Bank of Vietnam (SBV)’s Governor Le Minh Hung had issued a written response to voters regarding the real estate market and the credit-control on this market.
Accordingly, the Governor cited the latest data showing that, so far, credit for real estate business had been controlled at a reasonable level, accounting for 32.12 percent of the total balance of the sector, up 8.11 percent compared to the end of 2018. The credit for real estate consumption accounted for 67.88 percent of the balance of this sector, up 25.69 percent compared to the end of 2018.
Recently, to support the healthy development of the real estate market, in the credit management, SBV has implemented many credit control measures to limit risks, especially credit control for high-end projects, resorts, orienting the capital flows into real demand.
Expressly, SBV has stipulated limits and prudential ratios in banking operations in the direction of gradually reducing the rate of short-term capital to medium, long-term loans, and applying a higher risk coefficient for the Home loan of great value. In turn, SBV aimed to direct credit flows into the segment of medium-sized houses, low-cost commercial houses, and social houses.
Accordingly, the maximum ratio of short-term funds used for medium and long-term loans was then 40%, in which, the number of 37 percent was applied from 1 January 2020 to 30 September 2021; from October 1, 2021, to September 30, 2022, this would be 34%, and from October 1, 2022, this would be 30%.
According to the director of Economic Sector Credit Department (SBV), Nguyen Quoc Hung, real estate credit had been screened and invested productively.
Governor Le Minh Hung said that the tightening of credit capital in real estate business had forced businesses to find other sources of capital, including bond issuance. A report on the monetary market in February 2020 of SSI Research showed that there were 15 businesses issuing bonds with a total issue of 5.574 trillion dong, of which real estate businesses accounted for 72 percent of the issuance in a month.
However, before the development of the Covid-19 pandemic continued to increase, real estate enterprises found it challenging to avoid influence and proposed debt reduction, extension, and debt structure.
The Vietnam Real Estate Association (VNRea) had just submitted a petition to the government and ministries and sectors to take measures to support businesses investing and trading in tourism affected by Covid-19.
Specifically, it was recommended that the banking sector had a plan to reduce interest rates for loan contracts investing in projects on tourist apartments, tourist villas, office-stay combined accommodation, etc. The recommendation included reducing 50 percent interest rate during the epidemic period and 30 percent interest rate for one year after epidemic control, considering debt repayment, postponement, and rescheduling structure for businesses.
VNRea also proposed that the government assigned the Ministry of Finance to study tax solutions and policies to support businesses, such as extending the time to pay tax obligations to the budget for six months for each payment period after one year of epidemic control; exempting fines for late payment when enterprises fully paid taxes; extending the payment of land rent after the epidemic was under control; reducing the value-added tax, and delaying the tax payment time.
