Decreasing real estate bad debts
The real estate market is an especially important part of the economy. Experts have said that the 20-year-plus fledgling Vietnamese real estate market’s development remains unstable and that investment in the market in general remains spontaneous and the market’s supply-demand relation is still imbalanced. The financial market for the real estate market remains fledgling and underfunded. Financial institutions always play an important role in promoting the real estate market. In Vietnam, most of finance for the real estate market comes from the banks so effective, safe and sustainable management of the real estate market is not only important for the financial system but the whole economy as well.
BIDV General Director Phan Duc Tu said that the real estate inventory in the first half of 2014 fell 35 percent compared to the same period last year, valued at more than VND83 trillion. Thanks to the increased number of real estate transactions, the bad debt rate in the field dropped 2.5 percent compare to late 2014. The bad debts associated with real estate declined to four percent in the first half of 2014, Tu said.
Medium and long-term capital market development needed
Economist, Dr. Can Van Luc said that the real estate market was very important for every economy. The real estate market in Japan was valued at US$2.678 trillion, while Indonesia’s was worth about US$189 billion, Thailand about US$89 billion, Malaysia US$84 billion, the Philippines about US$48 billion while Vietnam was worth only US$21 billion. According to Luc, capital for the real estate market mainly comes from the banks, and Vietnam hasn’t had a credit system specifically designed for the real estate market and the loan risk weight in Vietnam is 2.5 times the international norm.
Economist, Dr. Can Van Luc said that it is necessary to have consistent solutions for the real estate market and that apart from improving the related legal framework, it is important to form new financial institutions, develop the capital market to ensure medium and long-term credit for the market.
Experts from Japan’s SuMi Trust Bank said that in each credit institution, prompt awareness and action for avoiding falling into real estate bubbles is difficult to be implemented from low-level to higher level authorities, but instructions for lower-level authorities is important; it is necessary to improve credit monitoring mechanisms and policies; experience showed that setting low standards for bad debts and adequate, less transparent inspection and supervision standards was one of the reasons that made supervision less effective.
Domestic economists said that along with improving the institutional framework for the real estate market, it is important to develop medium and long-term capital markets and balance the financial market’s structure, adjust and solve problems related to credit packages for the real estate market, promote the resolution of bad debts, create a market for purchasing and selling bad debts and dealing with assured assets, adjust the real estate loan weight, and encourage commercial banks to design proper credit products and services for the real estate market./.
By Duy Minh