Handling "Blood Clot"

Talking about the current inventory, Dr Tran Du Lich, Member of the National Financial and Monetary Policy Advisory Council said that inventory similar to bad debts, was considered to be a "blood clot", harmful for economic circulation. Holding large amounts of inventory, businesses were unable to recover capital or pay debts for banks, from which bad debts increased. In 2012, long-lasting large inventory was a major factor weakening business system, leading many businesses to bankruptcy or closedown. The industrial production index decreased significantly was an example, while this is an area of  of the National Financial and Monetary Policy Advisory Council said that inventory similar to bad debts, was considered to be a "blood clot", harmful for economic circulation. Holding large amounts of inventory, businesses were unable to recover capital or pay debts for banks, from which bad debts increased. In 2012, long-lasting large inventory was a major factor weakening business system, leading many businesses to bankruptcy or closedown. The industrial production index decreased significantly was an example, while this is an area of ​​major contribution to the overall growth, the driving force and leading growth of the entire economy. When the health of the economy-both the business sector and the public sector-has been reduced, the efforts to stimulus demands relieve the inventory pile, from which it’s difficult to revive the economy, posing the big challenge for the Government.

 

The Government has identified one of the key objectives in 2013 is handling inventory, bad debts and remove difficulties for enterprises to promote production. The Government determined that increase demand of the economy would be a solution to solve the inventory and expands credit for production and consumption, increase the credit balance of the economy, and have strong disbursement for investment projects. The Government also confirmed the change of minimum wage from 1.05 to 1.15 million, the adjustment of pensions, grants respectively from July 1^st 2013. At the same time there will be solutions to help businesses expand markets, reduce the cost of production through lower interest rates, implement tax-free solution to raise revenues, and simplify administrative procedures, anti-smuggling ... For ensuring spending, the Government will regulate closely the implementation of savings in 2013.

 

According to Vu Viet Ngoan, Chairman of the National Financial Supervisory Commission, basically the Government needs to focus on conducting banking and corporate restructuring to clean the statistic properties. A long-term measure to deal with bad debt is concentrate on overall restructuring of the economy. The experience of other countries in this case is that the government has to interfere. Through debt trading companies, the government can intervene to buy back debt, help businesses handle difficulties and restore the financial relationship between the bank and the credit business.

 

To solve the problem of bad debts, Prime Minister Nguyen Tan Dung will ask authorities to review and assess the accuracy of the total classification of bad debts. The credit institutions will have to take the initiative to restructure debt from risk prevention, and with business to treat security assets to liquidate bad debt.

 

According to the statistics, the country has VND 202,000 billion of bad debt; mostly in the property with about 70,000 unsold apartments equivalent to approximately VND 140,000 billion. According to Dr. Tran Dinh Thien, Director of the Institute of Economics of Vietnam, Vietnam will take about 7 years to sell out of inventory.

The difficulty of the real estate market is very deep and wide. To overcome difficulties of the real estate market will be the basis to promote the development of the economy. Government has determined that this is a special inventory, accounting for large proportion of bad debt. Therefore, the Government will extend credit home loans, encouraging banks to associate with the project owner to provide long-term credit to the customer wishing for housing. People's Committees of provinces and cities will coordinate matching funds to purchase residential housing and resettlement, social housing in order to increase demand for the real estate market.

 

Management agencies will also conduct a review of the assigned projects, in favorable conditions; it is allowed to split the apartment in order to lower prices, in line with the actual needs of the majority of people. Besides, the authorities will boost foreign investment in the office segment, apartments for rent, research, and adjust price policy for foreigners having long term investment projects in Vietnam, while strengthening state management of the property market.

 

This is considered the most important solutions and also attracted the attention and participation of many experts because economic restructuring means that the economic growth paradigm shift in the direction of improving the quality, efficiency and competitiveness that will be performed synchronously in all sectors in the country.

 

Restructuring investment is a focused area, gradually adjusting the investment structure in the direction of decreasing density, and improving efficiency, determining to overcome the investment spread. It’s necessary to complete the mechanism to increase the responsibility of the owner, the contractor and consultant supervision in ensuring the quality and progress of works and strictly handling violations. It’s also urgent to improve efficiency in the use of ODA as a basis for mobilizing financing, direct investment modify mechanism in the form of BOT, PPP, BT and policy fees, taxes, clearance ...

 

On the restructuring of state-owned enterprises, along with the termination of the pilot established corporations, the government is conducting the review of SOEs, asking them to make divestments in non-majored areas, along with the restructuring of the banks to prevent bad debts incurred.

 

With the synchronous and positive solution at the end of 2012, the agencies and the people hope that in 2013 Vietnamese economy will soon solve the "blood clot", bringing Vietnam’s economy to the new impetus.