Identify sustainable solutions to boost bond, realty markets: Vietnam PM

Vietnam's finance ministry, the central bank and other agencies have been tasked with identifying fresh solutions to prevent unexpected negative impacts and boost the bond and realty markets.

Directive 1177 issued Thursday by Prime Minister Pham Minh Chinh seeks to review lower-than expected progress of Vietnam’s real estate and bond markets despite recent improvements and initiate measures to catalyze their growth.

The steps taken by relevant agencies including the Ministry of Finance, the Ministry of Construction and the State Bank of Vietnam (SBV) to improve credit absorption and boost growth of the real estate and bond markets have shown initial results.

The corporate bond market has gradually stabilized and there have been positive developments in the real estate market with the SBV lowering the regulatory interest rates and implementing a VND120 trillion ($4.94 billion) credit program for social housing, workers’ housing, and apartment renovation.

The SBV has ordered commercial banks to cut costs and reduce loan interest rates for all businesses, including real estate developers.

The construction ministry has proactively assisted the real estate market in overcoming challenges and pushed localities as well as businesses to deploy the project of building one million social housing units for industrial park workers and low-income people. It has also promoted real estate trading floors.

However, the results of these measures have not met expectations. Credit growth and absorption has remained low, while bad debts have risen.

Directive 1177 aims to “efficiently, promptly and decisively” continue the implementation of solutions to boost credit absorption, the corporate bond market, and the real estate market.

It asks the finance ministry to urgently review and evaluate corporate bond issuers’ repayment capacities, especially for bonds that mature in 2023 and 2024.

The ministry should build scenarios, evaluate impacts and draft solutions in order to ensure safety and stability of the financial and monetary markets and avoid negative and unexpected impacts on economic growth, it says.

After monitoring and evaluating the repayment capacities of bond issuers, especially those facing difficulties and risks, the ministry should deploy suitable solutions to ensure market stability so that firms fulfil their obligations and the legitimate interests of investors are protected.

The finance ministry has also been asked to review Decree 08/2023 and relevant documents on private bond placements and trading of corporate bonds in the domestic and international markets in order to find suitable solutions.

The directive says that the SBV should collaborate with relevant agencies to manage credit growth reasonably to meet set targets, improve credit quality and promote credit for prioritized areas including investment, consumption, export, digitalization and green transformation.

The central bank should also monitor the real estate and corporate bond markets closely and identify measures to strengthen the banking sector and boost sustainable growth of the real estate and bond markets, it adds.

The SBV should also continue directing and helping localities and businesses in implementing the project to build one million social housing units for low-income earners and industrial park workers by 2030.

The construction ministry, meanwhile, has been asked to cooperate with the National Assembly, the country's highest-level legislative body, to update draft laws on housing and real estate business.

The Ministry of Natural Resources and Environment has been directed to collaborate with relevant units to update draft amended law on land.

Seventy companies in Vietnam raised a combined VND180.4 trillion ($7.36 billion) this year through October by issuing bonds, down 45% year-on-year, according to finance ministry data. The amount includes VND41 trillion ($1.67 billion) in October, up 75.2% against September.

Local firms also bought back VND191 trillion ($7.8 billion) worth of bonds before maturity in the 10-month period, up 30% from a year earlier. Some VND61.6 trillion ($2.5 billion) worth of bonds are set to mature in the last three months of the year.