The Deputy Governor of the State Bank of Vietnam (SBV), the Deputy Minister of Finance and the Minister of Construction answered NA deputies' questions on January 24 about the bad debts on loans in the real estate market.

 NA deputy Tran Du Lich raised questions about real estate market

NA deputy Tran Du Lich from HCM City appreciated that the SBV set the limit of 3% of total outstanding loans for real estate investment loans. However, he said the lending terms and interest should be made stable for at least three years to attract customers.

He added that banks should continue to extend lines of credit to projects that are 70%-90% complete. According to Chairman Nguyen Van Giau, of NA Economic Committee, the current fiscal policy has increased bad debt and created financial difficulties for businesses.

Deputy Governor of the SBV, Dang Thanh Binh, said banks will focus on supporting the nearly-completed projects soon so that idle inventory will be able to be put to use. According to Resolution No.2, in 2013 banks will reform their lending policies to make it easier for low-income customers to borrow. Binh said that a new lending mechanism with more capital available at lower interest rates was needed.

Meanwhile, NA deputy Bui Nguyen Suy mentioned that SBV Governor has admitted that loan appraisals have not been in accordance with regulations and has contributed to bad debt in the real estate market.

Binh said inspections carried out at 33 banks revealed a large number of wrongdoings, but that the information on misconducts in the real estate sector has not been compiled and totaled.

Many deputies voiced their doubts about the rate of bad debts in real estate sector that were reported by the SBV, which they totaled at 5.4%. Binh affirmed that total outstanding loans currently stand at 8.6%, with bad debt at VND12.3 trillion. He said this number is lower than the average rate of other sectors.

Nguyen Ngoc Hoa, President of Vietnam Cooperative Alliance in HCM City, said, "In many countries, the people can borrow from the banks to buy homes. Would Vietnamese banks consider taking this on as one of their main business? Only stable interest rates can boost the market. I wonder how banks would consider such a policy."

The Deputy Governor of SBV said, Vietnam is still a poor country and has a relatively low per capita income, yet at the same time the price for land and homes is continuously on the rise. This year the SBV plans to set up policies that would support home sales for low-income families.

 Deputy Minister of Finance, Nguyen Huu Chi

Member of the NA's Finance and Budget Committee, Nguyen Huu Quang, asked why the banks did not sue to force bankruptcy. He received answers from many others that the banks wary of the complicated procedures and preferred to carry the debts for some time in hopes of earning some profit.

The Deputy Minister of Finance, Nguyen Huu Chi, said they will try to do their part to rescue the real estate market by extending tax deadlines and reducing tax rates.

The revenue from real estate accounted for 11% of the annual revenue to state budget. In 2013 taxes on the sector will be reduced by about VND5 trillion (USD240 million), while VND15 trillion in fees will be postponed. The ministry will try to find other sources of revenue to make up for the loss of income.