Vietnam - ‘Property firms have to sacrifice’: Dr Cao Sy Kiem

While enterprises said the State Bank of Vietnam’s recent credit relaxing move was like a spiritual present, Dr Cao Sy Kiem former SBV Governor told the Vietnam Economic Times that property firms have to sacrifice.

Being as the member of the National Financial and Monetary Policy Advisory Council, he said each decision is very significant in the current context. The latest credit relaxing helped create conditions for a group of residents who have real demand to repair or buy houses. To clear the real estate market, the policy is not much effective because of small money amount and narrowed number of subjects being able to access the credit.

People said that with such requirements, the move was halfway measure. But Dr Cao Sy Kiem disagreed with the saying. In fact, the Central Bank feared that large supply of money would be hard to be controlled, stressing inflation. Additionally, banks are facing many difficulties in liquidity. Some of them are exhausted.

It is expected that the State Bank of Vietnam would switch on green light for commercial banks to legalize non-production lending ratio [at 16%] by the year end, he told.

Concerning whether ailing property companies will affect negatively to the economy if they are not recued, Mr Cao Sy Kiem emphasized, it is impossible to rescue each bank or enterprise. Policies should aim at people, harmonize general benefits.

Property market should return real value. The market at this time is like a bubble. If much capital is pumped into, the bubble will likely explode, he compared.

Before, property owners used to the richest in the country, especially super profit earners who received big supports from banks. So, selling off property products is the way to share profits. As prices are flying in the sky, people cannot afford. Most firms will have to sacrifice. My point of view is that the market should be let go flat, by that time buyers will benefit.

Banks and realty developers face hardships in avoiding the deadline written in the SBV’s regulation on non-production lending ratio through amending signing time of contracts. Dr Cao Sy Kiem agreed with the assessment. 30% of the real estate market was pumped by banks; therefore, participants of the market will cooperate to avoid the deadline. But, anyway, the property-backed loans are hard to be collected so lengthening the debt mature will make heavier consequences.

If more capital is supplied to the real estate market, it will kill the economy. So, we [national financers] recommended letting the credit for the market go flat gradually, he noted.

In his opinion, the property market is still frozen in the next year with very small changes in prices. Notably, the price of low-cost houses may increase. If having demand for houses, I will wait for several years, he predicted.

VietBiz24

Business & Investment Opportunities

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.