For the real estate business in Vietnam, the hope that market would recover in 2012 almost disappeared. It is time to look back on this year with so many ups and downs of the market, draw experience and find more opportunities for the development of the market in 2013.
That Vietnamese property market freeze had no small influence on the development of the whole economy. Therefore, the plan to rescue the market was set to regain growth momentum. However, in addition to the loosening monetary policy of the State Bank, the other solutions were only on paper. The half-hearted determination to restore real estate market is making people become more pessimistic.
Ministries and departments join hands
Recently, Minister of Finance Vuong Dinh Hue had a meeting with the financial agencies. He said that the Ministry of Finance is carrying out fiscal solutions to defrost the property market in 2013.
Accordingly, the package of measures will focus on reducing the corporate income tax. Construction businesses and real estate businesses will be offered time stretch of payment of land use.
Low income people are also the object of this package of measures. This is aimed at helping them to buy house. This will also be the basis for the recovery of the property market, which will gradually solve the problem of inventory, reduce the bad debt ratio. Property market recovery is the basis for the construction materials industry to work again.
On December 7th, Chairman of Hanoi People's Committee Nguyen The Thao said that Hanoi is also carrying out research solutions to "break the ice" of property market in 2013 including social housing segment. Several solutions have been mentioned. For instance, the city may purchase commercial house then convert it into relocation house for rent for employees. Besides, it supports policies and finance to help citizens to buy home.
Minister of Construction, Mr Trinh Dinh Dung also expressed the determination to rescue the market. He has directed management agencies and local governments in a drastic way. The state will share difficulties and solve problems for businesses.
Minister Trinh Dinh Dung said that the property market is in great difficulties and that if the situation prolonged, it would pose negative impact on the economy and increase bad debt for the economy. On the contrary, if the solutions are carried out at the same time with great determination, the market will surely warm up and the economy will recover.
Settlement of bad debt
Experts said that the clot of the current economy is bad debt. The current bad debt ratio in Vietnam is about 10 percent, which is not high compared to many countries in the world, but in the long run, if this problem is not quickly resolved, the economy may fall into loss of control.
To solve the problem of bad debts, the State Bank of Vietnam has set up a scheme of establishing Vietnam Asset Management Corporation (VAMC) and been waiting for the conclusion of the Government.
Accordingly, the VAMC will have the capital of about VND100 trillion. The money will be used to buy back bad loans, facilitating better financial tables of banks, businesses, and thereby clearing credit to the economy.
Along with supporting measures package, the solution to defrost property market is still considered the most important as it is the basis of ensuring the success of solving the bad debt problem. This will be the the most widely expected since the real estate market is riddled with great difficulty and has made great loss of money of businesses and banking system.
Theoretically, if the real estate market recovers with good liquidity, the burden of debt crossing over for such a long time for businesses and developers will be removed. Market recovery will lead to the decrease of bad debt rate in the banking system. It will create opportunities for businesses to recover and develop. Credit will continue to be pumped into the economy.
Many economists believe that the resolution of the freezing of the real estate market in this period is only situational and short-term as during the past years, cash flow has been invested ineffectively. Specifically, instead of investing in the highly competitive manufacturing sector, it flew into the real estate market and financial investment, which caused asset bubbles. Market rescue will quickly help the economy flourish. However, this will only solve its tip since the money is still poured into the loss-making state enterprises, even in the backyard ones and in infeasible projects.
Luong Tuan
Vietnamese
