VietNamNet Bridge – While Vietnam has opened its doors widely to welcome foreign investors to the domestic real estate market, it still prohibits Vietnamese investors to mortgage real estate at foreign banks for loans.



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The draft of the amended Housing Law is believed to “keep the doors open widely” to facilitate foreigners to buy houses in Vietnam. Policy makers needed many years to consider pros and cons before taking this step, because this is a delicate ground to tread.

Professor Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, the best-known land expert in Vietnam, said that once Vietnam opens its doors to welcome foreigners’ entries, it should also open the doors for Vietnamese to go to the world market.

Vo has suggested that the government should allow Vietnamese enterprises to mortgage real estate products at foreign banks for loans, which, together with the new provision of the housing law, would help rescue the real estate market.

Vo stressed that allowing foreigners to come in and Vietnamese to go out are the two dualistic measures which need to be implemented at the same time.

Replying to the warnings by experts that if the policy is applied, this would bring high risks in case the borrowers cannot pay debts, Vo said that the risks in allowing foreigners to possess properties in Vietnam and in mortgaging properties at foreign banks are nearly the same.

The expert stressed that it is now the right time for Vietnam to apply a more open policy. Once Vietnamese can mortgage real estate at foreign banks for loans, they would be able to get the capital they need to develop projects. If so, this would be the most effective capital flow to rescue the frozen real estate market.

Vo’s idea has been applauded by the HCM City authorities. The city, in a recent report to the Prime Minister about the real estate market, has proposed to allow using real estate as collaterals at foreign banks for loans.

Prior to that, the HCM City Real Estate Association (HOREA) had also proposed the Central Steering Committee on the Housing Policies and Real Estate Market to “untie” the current problem. HOREA’s Chair Le Hoang Chau said Vietnamese enterprises will have to obey the Vietnamese laws when mortgaging properties at foreign banks.

Meanwhile, the watchdog agency keeps silent to the proposal. A senior official of the State Bank said that a lot of problems may arise if Vietnamese properties are mortgaged at foreign banks, including the dispute settlement, the sale of properties by order of the court.

In mid-2012, the State Bank of Vietnam once organized a big workshop on the mortgaging of the land use right and the assets on land at foreign banks. However, policy makers and experts still could not come to a final conclusion.

The 2003 Land Law also gives limited rights to Vietnamese real estate developers in dealing with the issues relating to the borrowing. The law only allows Vietnamese legal entities to mortgage land use right and the assets on land at the credit institutions licensed to operate in Vietnam.

The amended 2003 Land Law, which is expecting the National Assembly’s ratification, stipulates that overseas Vietnamese, foreign institutions and individuals and joint ventures can mortgage properties at foreign banks. However, the Prime Minister will make decisions in every case.

Kim Chi