VND30 Trillion Credit Package: G-Hour Is Coming

Realty developers and people are still waiting for the long-awaited VND30 trillion credit package, which shows the government’s determination to rescue the market.

On December 18, 2012, the Vietnamese Prime Minister met with heads of ministries, Governor of the State Bank of Vietnam, the Ho Chi Minh City People’s Committee and representatives from the Ho Chi Minh City Real Estate Association to discuss the VND30 trillion credit package to save  the sinking real estate market. On December 26, 2012, the Government held a meeting to review and discuss the contents of Resolution No. 01, Resolution No. 02/NQ-CP. On January 7, 2013, Resolutions No 01, 02 were issued. On February 8, 2013, the Ministry of Finance issued Circular No. 16/2013/TT-BTC to direct the extension and reduction of some State budget collections in line with Resolution No. 02/NQ-CP. On March 8, 2013, the Ministry of Construction issued Circular No. 02/2013/TT-BXD  guiding to adjust apartment structure of projects of commercial housing , projects of investment and construction of urban area and  to convert commercial housing into social housing or  service building. On March 13, 2013, the State Bank of Vietnam announced a draft circular stipulating regulations on lending operations to support real estate market under the government’s Resolution No 02/NQ-CP dated January 7, 2013 to collect feedback from local people before officially issuing it. On March 25, 2013, the State Bank of Vietnam announced a document answering people’s questions about the regulations in the draft circular on lending operations to support real estate market. In the document, the State Bank of Vietnam explained that the removal of people allowed to buy social housing out of the list of the subjects to the VND30 trillion package is stated in Resolution No. 02. As planned, the draft circular would take effect on April 15, 2013 under Resolution No. 02/NQ-CP. However, two more weeks after the effective date, the draft circular has not made its debut and as planned next week or on May 5, the State Bank of Vietnam, the Ministry of Construction and concerned agencies would meet for the last time to discuss the VND30 trillion package before officially launching it to save the property market.

It is hard to say that the six-month roadmap that concerned agencies took to realize the contents of the government’s Resolution No. 2 is long or short. During the time, economists, experts, businesses and people also had massive discussions about the package with different points of views. Till the moment when the G-hour is about to come, all are only expectations. Mr Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association said that “the delay of the VND30 trillion credit package has made efforts of the government to save the gloomy real estate market, to deal with property inventories and to handling the government’s bad debts meaningless. The delay also defeated all expectations that has been emerged since the government issued Resolution 02”.

 

Many experts and the business community have many times discussed the significance of the VND30 trillion credit package. However, the big expectations on the VND30 trillion credit package have somehow frozen many transactions in the real estate market. Do Thanh Phong, Deputy Director of the real estate transaction floor of VPGLand, said that although customers of low-and medium-price apartments often made surveys on prices, they still hesitated to make any transactions on hope of supports from the package. “Customers often visited property transaction floors and met with project investors to study prices but no more has been done as they are still waiting for the package. All feared of buying at an unfair price and wanted to get access to cheap loans and to be named in the list of prioritized subjects. Therefore, only medium-priced apartments have transactions while the majority has been still in stagnancy as customers and businesses are all pinning high hope on the package”.

 

Not only Mr Phong but many project investors are also anxious. Some said that when they proposed customers pay more to continue the unfinished projects, all said that they wanted to continue delaying the projects waiting for the VND30 trillion credit package. Thus, investors of projects with apartments of less than 70 square meters, should take careful consideration into agreed prices in cases customers do not agree to pay more money to carry out the projects., if not they would go bust.

It can be said that the VND30 trillion package has big impacts although the value is not significant. Therefore, it should not delay the package for more as this is the good time for people to buy houses at reasonable prices, said Mr Doan Nguyen Duc, Chairman of the Management Board, Director of the Hoang Anh Gia Lai Group. All are waiting for the result of the meeting between the State Bank of Vietnam, the Ministry of Construction and concerned agencies. One concern of people who are expecting to buy medium-priced apartments or social houses is that the State Bank of Vietnam whether the State Bank of Vietnam takes into account the regulations to control the disbursement of the credit package to ensure that the credit will approach the right subjects or “interest groups” would take this chance to make profit from soft loans via commercial banks? They also worry that will they can get access to soft loans with an interest rate of 6 percent or they will have to pay more illegal fees when signing contracts with commercial banks? An investor who want to convert its commercial housing into social housing in Tan Binh district said that people would use tricks to pay debts that they earlier borrowed to buy houses to avoid differences in lending interest rates. Debt rollover reported during stimulus packages and cheap credit packages is not the new problem in Vietnam...

It is said that authorized agencies should carefully consider all possible problems before making a final decision so that the VND30 trillion credit package will work effectively to support needy people and businesses!?