VietNamNet Bridge – Difficulties remain, yet there is reason for optimism, Nguyen Duc Kien, Vice Chairman of the National Assembly's Economics Committee, told Thoi bao Kinh te Viet Nam (Vietnam Economics Times).

Credit growth has been rated positive, yet many companies have complained that they could not access loans from credit organisations, including banks. What's your position on this?

Based on credit growth in the first quarter of this year, I'm confident that the target of 12.5 percent growth for the whole year is achievable.

Measures to settle bad debts have been undertaken, including the establishment of the Vietnam Asset Management Company (VAMC) and the requirement that all credit organisations have to set up a risk fund.

Since last November, the VAMC has been able to buy more than 44 trillion VND (2.095 billion USD) worth of bad debt. Commercial banks themselves have also settled many of their bad debts.

However, many enterprises have complained about difficulties accessing bank loans. Though some agree that the capital flow has been positive more recently, in reality it remains a stumbling block.

The observation and monitoring of bad debt settlements have not yet seen capital resources utilised to settle the debts. This is not good, because we all know that when the economy warms up, the stock exchange improves. So too does the real estate market. The bad debts bought by the VAMC can also be further dealt with.

Our current level of bad debts is an aggregate of eight years worth of debt. Therefore, it is impossible to expect to resolve them within one year or even several months when the VAMC has only been in operation for four months.

It is a fact that the outstanding debt keeps increasing. So does credit growth. But our credit growth is still relatively small compared with the huge demand for credit in our society. I think the credit growth reported in the first quarter of 2014 is a rational figure.

Do you think that revenues from the sale of government bonds are mainly reserved for State Owned Enterprises (SOEs)?

No, I don't think so. You know, government bond proceeds (100,000 billion VND) from the first three months of this year are completely in line with the plan which was approved by the National Assembly.

It is dedicated to the construction of the Ho Chi Minh Highway and National Road 1A and the contractors are not SOEs. That's why I believe credit growth from the first quarter of this year has been a positive signal for our economy.

However, as I have said already, we have to look at where most of the money goes. If the money goes to the production of construction materials, including steel, it is a good sign. But if it goes to the real estate owners, it is a bad sign.

What is your position on the capital flows from the first quarter of 2014?

First of all, I should say the handling of bad debts through the use of capital stockpiles cannot be considered as a breakthrough in the national policy. However, the flipside of this is that releasing the huge stockpiles has generated a positive flow of capital in the market.

When we talk about a normal credit flow, we have to look at it from two sides - the borrower and the depositor. The borrower wants the interest rate to be low so that he/she can benefit from their production while the depositor wants the interest rate to be higher than the inflation rate.

What measures can help us to improve the status quo?

On the side of the credit organisations, the VAMC's duty is to help them to settle their bad debts and help them function normally.

But for the depositors, they have to calculate if they earn more money by depositing into the banks or by investing money in other activities. It is important to encourage people to deposit their money they aren't using into banks.

But in my opinion, it would be better for our economy in general, if we encourage people to invest their money into production. In that scenario, people would have to manage their capital themselves while receiving support from credit organisations. Our final objective is not to mobilise more money into credit organisations.

Source: Vietnam Plus