VietNamNet Bridge – The VND30 trillion bailout is believed to help warm up the real estate market, provided that the money can be driven to the right addresses.

The huge bailout

From June 1, 2013, the VND30 trillion bailout which aims to revive the real estate market would take effects. The VND30 trillion package would be pumped by the State Bank of Vietnam into the market through the five state owned banks. Of this amount, real estate firms would be able to borrow 30 percent, or VND9 trillion.

Under the State Bank’s Circular No. 11, which guides the disbursement of the bailout, the real estate developers to be eligible for the loans are the developers of the housing projects for low income earners. The list of the developers would be made public by the Ministry of Construction.

The interest rate of the loans would be six percent per annum in 2013, while the rates for the next years would be 50 percent of the market commercial interest rates at that moments, but would not be higher than six percent.

The real estate project developers can borrow money for five years to pay the expenses to be arisen from January 7, 2013, not including the tax duties. They must not borrow more than 30 percent of the total capital needed to develop the projects.

Director of the State Bank’s Credit Department -- Nguyen Viet Manh said it’s a right decision to lend money to project developers as well. Once accessing bank loans at low interest rates, the investors would be able to make low cost houses to sell. If the loans only target low income earners, or the buyers, the bailout would fail.

Also according to Manh, the Bank for Investment and Development of Vietnam (BIDV) has registered to borrow VND10 trillion from the package for re-lending.

The bank plans to reserve 60 percent of the sum of capital for real estate developers, and the other 40 percent for buyers, while the proportions would decrease gradually year after year.

The projects to be prioritized to get bank loans are the half finished ones, which can deliver products in 2013-2015, or the projects which have completed the legal procedures for the investment, and have 50 percent of apartments sold.

Disbursement to be made in accordance with projects’ implementation speed

Nguyen Phung Thieu, General Director of Saigon Gia Dinh JSC, which is developing a housing project for the poor, said the banks need to clarify the requirements real estate enterprises need to meet to be able to access the loans.

Le Huu Nghia, Director of Le Thanh real estate firm, while worrying that the money may flow to the wrong addresses and would be used for the wrong purposes, said it’s necessary to keep a strict control over the disbursement to be sure that the money does not go to the companies which have close relations with banks.

Nghia has also suggested disbursing money in accordance with the projects’ implementation pace.

The biggest obstacle for real estate firms is the lack of collaterals for the loans. The assets of the firms all have been mortgaged at banks for the previous loans. Therefore, it would be better for the firms if they can mortgage the projects they develop with the banks’ money.

NLD