VietNamNet Bridge – The State Bank of Vietnam (SBV) has submitted to the government a plan on launching a VND50 trillion a credit package aiming to help revive the commercial housing market.

The information was confirmed by Deputy Minister of Construction Nguyen Tran Nam at a workshop held on January 30 in HCM City.

Under the program, banks would provide a 10-year loan at the interest rate of 7 percent per annum for the first year. The interest rate in the following years will be floated and determined by commercial banks.

If the plan receives the Prime Minister’s approval, this would be the second huge package launched to rescue the real estate market, which has been stagnant for years. The first one, worth VND30 trillion, was launched one year ago.

According to Nam, VND10 trillion worth of credit contracts had been signed by mid-January, or one-third of the total value of the VND30 trillion package.

Of this, VND6 trillion was lent to 12,000 buyers of housing.

The disbursement of the VND30 trillion package will end on June 1, 2016.

Nguyen Van Duc, deputy general director of Dat Lanh Real Estate Corporation, said the plan to rescue the real estate market with the bailout package had “failed completely”.

Duc said that only 40-50 projects in HCM City had been moving ahead as expected, while another 700 projects still have major difficulties.

“About 90 percent of projects still cannot be sold, waiting for death,” he said.

Analysts noted that the disbursement of the VND30 trillion has been going very slowly and that the credit package has not been really helpful, because it was very difficult to access the loans.

A report from the State Bank’s HCM City Branch showed that by October 31, 2014, local commercial banks had disbursed VND658 billion for two businesses, and VND393.83 billion for 1,444 individual buyers.

The failure of the VND30 trillion bailout has caused analysts to doubt if the VND50 trillion credit package would help or lead to an impasse.

Pham Sy Liem, former Deputy Minister of Construction, and now chair of the Vietnam Construction Federation, also said that launching the VND30 trillion package with an aim to develop housing for the poor was a mistake.

Though the government needs to help develop housing for the poor, this must not be the solution to rescue the real estate market and the economy, he said.

Liem believes the government should focus on developing “common commercial housing” instead of housing for the poor. “Common commercial housing” is considered affordable for middle-income earners who would pay about 30 percent of their income every month toward housing payments.

Mai Thanh