Vietnam’s government should take prompt action in removing obstacles in legal procedures and credit access in the property sector to help the ailing industry recover as realty enterprises face high risks of bankruptcy, Vinhomes chairman Pham Thieu Hoa said Friday.
He delivered the message at a national business meeting chaired by Prime Minister Pham Minh Chinh to tackle woes in the property market with representatives from government agencies, property developers, and banks.
The meeting took place as the market experiences a lack of credit access and legal problems, while developers struggling to issue bonds to improve their working capital. Limited supply is another problem facing the sector.
"The public’s home demand is still very large and will become bigger, but supply is too low. Enterprises alone cannot satisfy the demand,” the Vinhomes chairman told the meeting.
He said he expected the government and its agencies as well as the central bank to help the ailing sector recover, and also to support residents, companies, and the entire economy.
Vinhomes, listed on the Ho Chi Minh Stock Exchange as VHM, is the housing arm of Vietnam's biggest private conglomerate Vingroup and a leading housing developer in the country.
According to the Ministry of Construction, the number of real estate companies filing for bankruptcy last year increased by 40% year-on-year.
Ho Chi Minh City Real Estate Association chairman Le Hoang Chau said the two biggest challenges in the sector are legal problems and the lack of credit access. He estimated administrative procedural issues account for 70% of the woes property developers face.
Regarding the current credit crunch, he proposed the State Bank of Vietnam (SBV) considers extending the regulation stipulating that credit institutions are allowed to use 34% of short-term mobilized capital and savings for medium and long-term loans until the end of 2024. The regulation says that the ratio will go down to 30% on January 1, 2025.
Chau also proposed the central bank considers not prohibiting credit institutions from buying corporate bonds in cases where corporate bonds are issued with the purpose of restructuring the issuer’s debts.
He proposed the government should promptly approve a Ministry of Construction proposal on a credit package of VND110 trillion (over $4.6 billion) to be used to refinance commercial banks designated by the SBV’s target of building one million social housing apartments in the period 2021- 2030 period.
Prior to Friday’s meeting, property developers had called on the SBV to increase credit quotas, allow debt restructuring and a longer payment process, and to approve new loans for both developers and buyers.