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Lukewarm reception for VNĐ120 trillion credit package
Vietnam News - 3/14/2024 3:18:22 PM
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The VNĐ120 trillion (US$4.87 billion) credit package for social housing and workers' housing has received a lukewarm reception from potential borrowers, said participants at a conference held yesterday in Hà Nội to discuss measures to speed up its disbursement. 
According to the State Bank of Vietnam (SBV), only 68 of such projects, located in 28 out of 63 cities and provinces across the country, have been announced to date. Of these, just 30 have signed up for the fund with the remaining may not require the money at all as they have either been completed or secured funding sources. 
Commercial banks said they remained committed to providing up to VNĐ7 trillion to 15 out of the 30 mentioned-above projects including cash injection, credit to investors and to homebuyers. To date, VNĐ640 billion has been disbursed, out of a total amount of VNĐ1.9 trillion in credit to investors while VNĐ6 billion has been disbursed to homebuyers.
BIDV has disbursed funds to investors in Phú Thọ, Thanh Hóa and Bình Dương in the amount of VNĐ95.7 billion, Vietinbank to investors in An Giang in the amount of VNĐ128.6 billion and VNĐ400 million to homebuyers, Agribank to investors in Bắc Ninh, Quảng Ninh and Kiên Giang in the amount of VNĐ415.7 billion and VNĐ5.7 billion to homebuyers.
Nguyễn Tuấn Anh, director-general of the Housing and Urban Development Corporation (HUD) said the lukewarm reception of the credit package was due to many localities facing a shortage of suitable and available land resources, as well as time-consuming administrative procedures on the banks' part. 
Investors and developers have long voiced their concerns over the package's high interest rates, which ironically have not been lower than the market's rates despite being earmarked for social housing development. To make matters worse, the process of purchasing social housing units has been said to be complicated and time-consuming.
At the conference, industry insiders and experts called on commercial banks to lower interest rates to around 6 per cent a year for homebuyers and to 9-9.5 per cent a year for investors.
Meanwhile, commercial banks confirmed they have been facing difficulties in finding borrowers for the package. They said many borrowers have not shown up to collect the funds even after credit agreements were signed for significant amounts, preferring to use their own funds first. 
Lê Ngọc Lâm, director-general of BIDV, said BIDV has been working around the clock to seek out and approach potential borrowers. The bank said it has approved nearly VNĐ1 trillion in credit but only disbursed VNĐ96 billion so far, reflecting borrowers' hesitancy at the package.
Phùng Thị Bình, deputy director-general of Agribank, said the bank has signed credit agreements with eight social housing projects for an amount of VNĐ2.5 trillion but disbursed only VNĐ400 billion so far. She contributed to the package's slow disbursement pace to projects facing legal issues and the narrowly defined groups of potential buyers of social housing projects.
For example, BIDV said it provided funds to a social housing project located in Thuận Thành Town, Bắc Ninh Province. However, once the project was completed the project's investor couldn't make enough sales because the provincial authority only allowed workers residing in the province to make purchases. Hundreds of applications to buy were disqualified out of the gate, leaving the investor in a mountain of debt, the bank's money in limbo and apartment units unused. 
Representatives from BIDV called on the Ministry of Construction (MoC) and local governments to streamline legal procedures for projects and expand the target group for renting and buying social housing.
Speaking at the conference, SBV deputy governor Đào Minh Tú said all eligible projects must receive funding on time and that the package plays an important part in the country's target of building 1 million social housing units.
Regarding higher-than-expected interest rates, the banks said the source of funding in the package comes directly from the banks, unsupported by the state's budget, and therefore, must be set competitively. They called on the government to provide additional assistance to lower the rates.
Deputy minister of construction Nguyễn Văn Sinh said that the ministry has requested localities to report on the implementation of the package to identify difficulties and potential solutions. VNS
Read original article here
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