Vietnam PM instructs banks to ease credit crunch
Prime Minister Pham Minh Chinh has ordered the country’s banking system, including the central bank (SBV), to rapidly provide smooth credit for the business community, which is facing a severe lack of funding.
The instruction is part of a government resolution passed at a cabinet meeting last week. Real estate and other prioritized business areas in the economy need access to credit sources, and banks also need to cut costs and reduce lending interest rates, the PM said
The property sector accounts for 11% of Vietnam’s GDP and has close ties with many other industries while providing many jobs, the resolution reads.
The sector has faced serious liquidity woes due to credit tightening and poor sales. Ministry of Construction statistics shows nearly 40% of real estate enterprises went bankrupt last year. At the end of 2022, the government set up an inter-ministerial taskforce dedicated to removing these woes.

Apartment blocks in Hanoi, northern Vietnam. Photo by The Investor/Trung Hieu.
In the cabinet resolution, the PM ordered the construction ministry to work on measures to ease the difficulties and submit reports by February 15.
On Wednesday, SBV Deputy Governor Dao Minh Tu told a Hanoi meeting with property developers that the central bank did not tighten credit supply just for their sector as the regulator treats it equally to other industries.
In 2022, loans provided for real estate made up 21.2% of the entire economy’s total outstanding loans, a five-year record high. Of the real estate loans, more than 62% went to housing purposes, nearly 21% to land use rights, while industrial real estate got nearly 2.7%, and other purposes received 13.8%, he said.
Explaining the credit crunch, the SBV stated that banks in Vietnam had provided too much credit in the first half of 2022 to a decade-high, so there was little room for expansion in the second half. This was one of the reasons behind the credit shortage, it claimed.
Last year, due to the government's tightened supervision and the arrest of entrepreneurs for bond issuance violations, the corporate bond channel was almost closed to property developers.
That left developers relying on bank loans while the banks had to allocate credit evenly across different sectors. Moreover, credit supply is part of the country's monetary policy and other macroeconomic measures, meaning that it is under strict supervision.
According to reports from banks, the construction ministry and the Ho Chi Minh City Real Estate Association, the main difficulties facing the real estate industry are legal procedures, which account for about 70% of market woes, along with investment procedures and corporate bond problems. Therefore, these problems need inter-ministerial measures to be solved, according to the SBV.
The SBV in a report delivered at the Wednesday meeting told banks to further tighten control over credit risks in the high-end housing segment, where supply already overwhelms demand, as well as loans likely to be used for market manipulation or speculation.
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