VietNamNet Bridge – The Ministry of Construction (MIC) and the State Bank (SBV) both have loosened the requirements on the borrowers of the VND30 trillion package in an effort to speed up the disbursement. However, the power is in the hands of commercial banks.

Lending program opens to more subjects

MIC and SBV have once again taken actions to accelerate the disbursement of the VND30 trillion bailout so as to rescue the real estate market.

70 percent of the bailout, or VND21 trillion, was initially planned to be lent to buyers, while the other 30 percent, or VND9 trillion, to real estate developers.

However, with the limited subjects to the lending program and the complicated procedures, the disbursement went so slowly that the watchdog agencies felt impatient.

Therefore, by September 30, or four months after the bailout was launched, commercial banks had disbursed VND142.5 billion to 590 individual clients and VND54.8 billion to real estate firms.

The Hanoi People’s Committee then planned to propose the Prime Minister and relevant ministries to give the opportunities of buying houses under the VND30 trillion program to more subjects.

Meanwhile, Tran Dinh Cuong, Deputy Director of the HCM City branch of the State Bank, said by October 15, only 179 individual clients had obtained the loans at the interest rate of 6 percent per annum, while no business had got the loans under the program.

The Ministry of Construction, which is in charge of the disbursement of the credit package, on November 7, released a circular, under which more people are subject to the preferential loan program.

SBV and MOC powerless?

Despite the big efforts made by SBV and MOC, analysts still keep doubts about the effects of the new decisions.

According to MOC, the biggest reason that prevents people from approaching the VND30 trillion package is that they have to prove their capability of paying debts.

Meanwhile, SBV believes that the problem lies in the complicated procedures real estate developers have to follow to re-register their projects as the housing projects for the poor, instead of commercial housing projects.

On November 7, 2013, SBV sent a dispatch to Agribank, BIDV, Vietcombank, VietinBank and MHB, the banks in which the State holds the controlling stakes, urging them to speed up the disbursement.

Prior to that, on July 4, a dispatch with the similar content was also sent to the five banks already.

Analysts have noted that while SBV and MOC can set up the requirements on the borrowers, only commercial banks can decide whether to disburse money.

VND30 trillion package helpless?

Dr. Pham Sy Liem, former Deputy Minister of Construction, now Secretary General of the Vietnam Construction Federation, said it is a blunder to spend VND30 trillion on the housing program for the poor.

Liem said the government should have focused on the development of popular houses and driven the VND30 trillion into the sector. “Popular houses” should be understood as the houses for the people with medium incomes, who have to pay 30 percent of their total income a month for the house purchase.

Nguyen Van Duc, Deputy Director of Dat Lanh Company, also thinks Vietnam has failed to rescue the real estate market with the VND30 trillion bailout.

Mai Chi