The nation’s financial woes have been hot on the agenda of the on-going
National Assembly session.
The National Assembly questioning
session sees State Bank governor Nguyen Van Binh discuss issues like bank
restructuring, non-performing loans or stuck credit garnered special attention
from the public.
When softer interest rates and
foreign exchange market stability were appraised as two ‘plus’ to the
management of Binh, then unsettled bad debts, slowing bank restructuring, firms
struggling to get loans and mess in the bullion market were regarded as the
Governor’s four major problems albeit it might be unfair to put all the blames
on the Governor management.
In respect to bank restructuring
efforts, many deputies assumed bank restructuring had progressed at a snail
pace while lacking transparency.
Cross-holdings between banks and
their associated companies and group interests were among central issues in the
session involving Binh.
As for the bullion market, though
Decree 24/2012/ND-CP on gold business management came in force a half year ago,
the gold market is still shaky. Management policies are almost short-term whereas
effective measures to raise gold from the community have yet to be in place.
However, the most stinging issue
which could dim economic rebound is firms’ capital distress since throngs of
firms could not put hands on loans.
In fact, up to 40 per cent of
firms could not or have to borrow at dear costs, according to Vietnam Small and
Medium Size Enterprises Association chairman Cao Si Kiem.
“The 3.3 per cent credit
expansion so far this year fails to uphold firms grow. Firms even did not dare
to borrow as they fear with such high lending rates the more they do, the
bigger the losses,” Kiem said.
Ho Chi Minh City deputy Tran
Hoang Ngan had attributed non-performing loans to current stuck credit.
Advocating this mindset, senior
financial expert Dr. Le Xuan Nghia assumed banking system and the economy’s
most thorny issue at present was bad debts.
Nghia said it would take at least
10 years for banks to address their bad debts using internal strength. As a
consequence, economic growth would slow down or even face zero per cent growth
in that period.
“Firms will face a cessation of
operations and dissolution in ever-increasing number unless the government took
on the task of tackling bad debts,” Nghia said.
Of the bad debt structure, those
in property reportedly occupied 20-30 per cent. In basic construction local
governments owe construction firms VND90 trillion ($4.2 billion) and
non-performing loans at Vietnam Development Bank (VDB) amount to VND35-40
trillion ($1.6-$1.9 billion) mainly lent to state businesses.
Bad debts in the form of state
budget, VDB and state firms’ loans account for a large part in current debt
structure, so the state is crucial in tackling bad debts.
“To address capital woes, the
government or State Bank issuing bonds to raise fund would be a wise decision
in current context,” Nghia commented.
Thuy Lien | vir.com.vn
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