return icon

Should Gov’t issue tax free bonds?

 VietNamNet Bridge – Economist Nguyen Tri Hieu talks to the Hai Quan (Customs) newspaper about possible plans to generate money for the Government’s affordable housing scheme in its second phase

VietNamNet Bridge – Economist Nguyen Tri Hieu talks to the Hai Quan (Customs) newspaper about possible plans to generate money for the Government’s affordable housing scheme in its second phase.


Mr. Nguyen Tri Hieu

The Government’s low interest VND30 trillion (US$1.41 billion) loan package for home buyers and property developers has just ended. How do you evaluate the outcome of the programme?

I should say the loan package has responded to the housing requirements of certain groups of low income wage/salary earners. The scheme has greatly contributed to the liquidity of the real estate market.

However, the sum was too small compared to the real demand of low income wage earners. At present, the Government has assigned the Viet Nam Bank for Social Policies (VBSP) to arrange the money for the second phase of the programme with an interest rate of 4.8 per cent per annum. But the problem now is where the VBSP can find the capital source.

If the lending interest rate will be the same of 4.8 per cent per annum, the maximum saving interest rate must be 3.3 per cent so that the VBSP can apply the interest rate of 3.3 per cent to the borrowers. This question is still hanging in the balance.

The Government has fixed the 4.8 per cent interest rate for the social housing scheme while the funding has not yet been settled. Do you have any comments on the government’s decision?

I don’t know whether the Government has already seen big potential financiers for the scheme or not. But the ball is now in the Government’s court.

In my opinion, if the Government has not yet found any capital resources for the scheme, the Government should not declare such a lending interest rate. In other words, a fixed interest rate as declared by the Government will put the VBSP in a tight position.

I think at present we should rule out the possibility of mobilising capital from the people with an interest rate of 3.3 per cent per annum.

For the real estate market, such a situation is a risk for the market. Real estate developers are likely to face another real estate bubble.

Under the Government’s decision, the 4.8 per cent interest rate will be applied by the VBSP. But what about the interest rates in other commercial banks? Must it be the same rate at all banks?

I should say such a loan is designed for low income people. That’s why the 4.8 per cent interest rate cannot be applied to all Vietnamese commercial banks.

In reality, the interest rate applied at most commercial banks is double that of the VBSP. If the Government wants the commercial banks to apply the 4.8 per cent interest rate in the affordable housing scheme, the Government has to refinance them with low interest loans from the State budget.

To my knowledge, Viet Nam’s capital market is divided into two segments – the monetary market and the capital market. The former market is developing rapidly while the latter is developing at a snail’s speed. That’s why I don’t think that the Government has sufficient money to refinance it to the commercial banks for them to lend out to beneficiaries in the government’s affordable housing scheme.

So where can we find the money to finance the social housing scheme in the present context?

In my opinion, may be the Government, the State Bank of Viet Nam, the Ministry of Construction or the Ministry of Finance have to act as a focal point in pulling together the capital resources for the VBSP. This is a very tough question! At present the interest rate of government bonds is much higher than 3.3 per cent.

It’s my suggestion that the Government issue government bonds with long maturity dates and low interest rates. Coupled with that, investors’ benefits from the bonds will be exempt from taxes. Or, the State Bank of Viet Nam may use ODA funds to refinance the VBSP.

related news

Vietnam’s economy reduces dependence on ODA

Monetary market experiencing tough days

Vietnam successfully manages monetary policy

Vietnam needs more affordable housing

Urgent need: workers’ housing



Nguyen Thi Tam wins silver at World Boxing Champs

Vietnamese boxer Nguyen Thi Tam lost 0-5 to world defending champion Nikhat Zareen (India) in the final match of the IBA Women’s World Boxing Championships on March 26 evening.

Da Nang releases MV to stimulate tourism

A music video entitled “Tuyet voi Da Nang" (Da Nang FanstastiCity) was officially released on several media platforms on March 25, aiming to promote images of the central beach city to both domestic and foreign tourists and stimulate travel demand.

Sapling from world's longest-living Bodhi tree planted in Bai Dinh pagoda

A sapling marcotted from a 2,300-year-old Bodhi tree (also known as sacred fig with the scientific name of Ficus religiosa), the oldest of its species in the world, has been planted at the Bai Dinh pagoda in the northern province of Ninh Binh.

Cruise ship brings more than 2,000 int’l visitors to Ha Long

Malta-flagged cruise ship Mein Schiff 5 docked at Ha Long international port in the northern province of Quang Ninh province on March 26, carrying 2,191 European visitors to the locality.

Mekong Delta develops trademarks for specialties

Building and developing trademarks and obtaining certificates of origin are considered effective ways to create added value for products, thus expanding markets for specialties of the Mekong Delta.

Vietnam named in Agility’s top 10 Emerging Markets Logistics Index 2023

Vietnam has been ranked in the top 10 places in the 2023 Agility Emerging Markets Logistics Index compiled by Agility, one of the world’s top freight forwarding and contract logistics providers.

Boxer Nguyen Ngoc Hai wins WBA belt

Nguyen Ngoc Hai defeated Campee Phayom of Thailand with a knock-out victory at Vietnam's largest professional boxing tournament LEAD: Born to Lead to win the vacant World Boxing Association Asia South super lightweight title in HCMC on March 25.

Cumbersome procedures destroy creativity

Principles and regulations are set to serve development, but, ironically, many of them have become obstacles that hinder development.

AIS issues warning about software security flaws in Vietnam

The Authority of Information Security (AIS) has requested agencies, organizations and businesses to check systems affected by six security vulnerabilities in Microsoft’s products, and update them with patches to avoid the risks of being attacked.

VN corporate bond market warms up after lackluster year

Real estate firms and leading enterprises issued nearly one billion USD worth of corporate bonds within two weeks after the government released a decree, removing obstacles for enterprises.


Roof proposed for HCM City Walking Street

New tech promises fewer delays at country’s biggest airports

The Civil Aviation Authority of Vietnam has just approved to pilot the implementation of the Airport Collaborative Decision Making (A-CDM) model at the country's two biggest airports of Tan Son Nhat and Noi Bai.

VN National Tourism Year 2023 kicks off in Binh Thuan

The ’Bình Thuan-Green Convergence’ themed programme seeks to drive green growth and promote tourism development through collaboration with other economic sectors for sustainable progress.


Gov’t instructs acceleration of public investment disbursement

35 Vietnamese students compete at Int’l Robothon 2023

Thirty-five Vietnamese contestants will compete in the Leanbot category as part of the International Robothon 2023 contest due to get underway in Malaysia on March 26.