Vietnam Assets Management Company (VAMC) has just announced the five-year development and business plan for the period of 2019-2023.
In particular, VAMC aims to develop into a centre in the bad debts handling associated with restructuring credit institutions’ systems, promoting the evolution of the market of buying and selling bad debts, ensuring the safe and sustainable development of the credit institution system, with sufficient capacity and resources for buying, selling and handling bad debts, valuation and auction of assets.
Specifically, the VAMC’s five-year target is to complete the handling of bad debts bought through special bonds; promote activities of buying, selling and handling bad debts under the opening market mechanism as the main activities of the company; enforce the development of bad debt market, in which VAMC plays a central role.
By 2020, to buy 330 trillion dong of bad debts
VAMC said that since 2019, bad debts had been purchased via special bonds of credit institutions, which was weak, might cause risks for the system and had a bad debt ratio greater than three percent.
Regarding the purchase of bad debts, accumulated bad debts are planned to be at least 330 trillion dong by the end of 2020. In particular, the value of bad debts purchased under the market mechanism reaches at least 20 trillion dong on the purchasing price basis. The period of 2021 2023, VAMC will focus on buying bad debts at market prices.
Regarding debt handling, by the end of 2020, it will basically complete the handling of bad debts purchased (excluding bad debts bought via special bonds of credit institutions, which are weak and may cause risks for system). During the period of 20212023, it focuses on dealing with bad debts bought at market prices and at the same time continues to handle the bad debts bought through special bonds.
Notably, VAMC said it would set up and operate a bad debt trading floor; boosting the operation of bad debt trading markets, in which VAMC was the centre of the market. To accomplish this goal, VAMC focuses on building legal documents to submit to competent authorities in 2019 for approval and carry out immediately in 2020. At the same time, it will study, propose models and legal framework for bad debt trading floors to establish and operate in 20202021.
According to the plan for the next five years, 2019, VAMC will buy 4.5 trillion dong of bad debts at market price, handling 50 trillion dong of bad debts.
In 2020, it aims to pay special bonds with a value of 60 trillion dong; buying 8.4 trillion dong of bad debts at market price. Total debt recovery is expected to reach 21.72 trillion dong, of which 15 trillion dong is from special bonds and 6.72 trillion dong from debt purchase.
In 2021, VAMC will achieve the target of paying special bonds with the value of 20 trillion dong; buying 9.5 trillion dong of bad debts at market prices. Total debts recovered is expected to reach 12.6 trillion dong, of which five trillion dong will be collected from special bonds, and 7.6 trillion dong will be from debt purchase at market price.
In 2022, this enterprise aims to pay special bonds with a value of 15 trillion dong; buying 10.5 trillion dong of bad debts at market prices. The total debt recovered is expected to reach 11.4 trillion dong, of which three trillion dong is from special bonds, and 8.4 trillion dong is collected from debt purchase at the market price.
In 2023, VAMC said that it would continue to carry out activities of buying, selling and handling bad debts bought at market prices and at the same time continue to handle the bad debts bought with special bonds.
VAMC shared that it would prioritise to buy bad debts with great value in order to minimise the cost of monitoring, managing and supervising borrowers and security assets for VAMC; prioritise the transfer of bad debts bought with special bonds to buying at market prices as prescribed.
At the same time, it chooses to buy each bad debt or buy in lots to speed up the process of buying and selling bad debts through VAMC. Purchase price of bad debts is implemented in accordance with Decree 42.
In order to carry out the above ambitious plan, VAMC plans to submit to the prime minister to supplement charter capital for it to reach five trillion dong in 2019 and ten trillion dong in the period of 20202021. Currently, VAMC’s charter capital is two trillion dong.
VAMC wants to mobilise capital from domestic and international organisations and individuals in accordance with the law. It shall deduct into annual expenses the reserve fund to supplement charter capital on the principle of ensuring the balance of revenue and expenditure as prescribed.
In addition, there are some financial mobilisation measures such as issuing VAMC bonds to buy debts at market prices, cooperating with domestic and foreign investors to participate in restructuring enterprises, buying and selling enterprises according to legal regulations in the process of handling bad debts.
