VietNamNet Bridge - Minister of Construction Trinh Dinh Dung
told the National Assembly yesterday, October 31, that the total outstanding
loans related to real estate is about $50 billion.
The Minister of Construction said
the real estate market is a frozen zone, with very few transactions. Real
estate businesses are in trouble while a large proportion of poor people still
lack housing.
According to the State Bank of
Vietnam (SBV), by August 31, the total outstanding loans related to real estate
was about VND203 trillion ($10.15 billion), of which the non-performing loan
(NPL) ratio was 6.6 percent.
However, Minister Dung said if
the outstanding loans related to real estate, which includes loans related to
real estate business, loans for production and business investment, mortgages
by real estate, the credit balance is about 57% of total loans, or about $50
billion.
"So if production and
business are in difficulty, bad debts of businesses increase, along with the
difficulties of the real estate market, the impact on many industries such as
construction, building materials, electrical equipment, steel industry, etc. will
be huge. It will also affect the safety of the banking system and the macro
economy," he warned.
As a result, the people will be
affected, as a whole. Drastic measures should be taken to remove difficulties
for this market, the Minister added.
Dung said, to remove difficulties
for the real estate market, it must fix the cause of the real estate problems.
First, in recent times, the real
estate market has developed spontaneously and in an unplanned way, thereby
resulting in oversupply. Most of real estate products are high-class and
medium-class, not cheap products for low-income earners and social housing.
On the other hand, the capital
for real estate projects mainly relies on bank loans and capital contributions
of people who buy houses. So when the products are unsold, the market freezes,
bad debts rise. The government is focusing on improving the legal documents
related to management of construction, especially related to urban development
and real estate business.
Thirdly, along with the State Bank
of Vietnam, banks have to extend credit loans to investors, and home buyers,
especially social housing buyers.
He also proposed the National
Assembly to allow VAT exemption or reduction for households that buy social
housing and commercial housing for the first time and to allow investors in
social housing to enjoy the highest preference of enterprise income tax.
Minister Trinh Dinh Dung also
proposed a number of measures to deal with inventory building materials.
"Solving difficulties for
the real estate market by directing real estate businesses to build housing for
the poor, low-income people will achieve a variety of purposes," Dung
said.
There were 2,399 projects
(statistics from 44 provinces) and approximately 71,000 hectares of land is
devoted to real estate. Hanoi alone has 368 projects with 20,000 ha.
National inventory: 16,469
apartments, 4,116 low-rise buildings, 25,870 m2 of office space for lease.
Le Nhung
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