Real Estate Credit: No Unreasonable Tightening

1:51:26 PM | 9/6/2022

Despite its request for no unreasonable tightening of real estate credit, the Government of Vietnam also directed relevant agencies to strengthen lending inspection and supervision.

Deputy Prime Minister Le Van Thanh signed Directive 13/CT-TTg of the Prime Minister, dated August 29, 2022, on solutions to promote safe, healthy and sustainable development of the real estate market.

According to the directive, the real estate market plays a very important role in maintaining macroeconomic stability, controlling inflation, ensuring large balances and promoting growth.

However, real estate development has also shown a lot of shortcomings, limitations, inadequacies, unsustainability factors and risks like the unreasonable structure of real estate; higher price of real estate products, especially housing, than people's incomes; and inconsistent, incomplete, unreliable and nontransparent property market database

Hence, the Prime Minister requested no irrational credit tightening. Instead, authorities will intensify inspection and supervision.

Besides, the Government urged them not to criminalize civil-economic relations; but to actively detect, prevent and strictly handle violations and pay attention to acts of tax evasion in the real estate business so as to avoid market collapse, protect right doers, and defend harmonized interests of the government, people and businesses.

“Harmoniously, rationally and effectively combining fiscal policy and monetary policy; implementing monetary policy flexibly, safely and prudently; rationalizing expansionary fiscal policy; ensuring performance, strictly managing prices and markets; not suddenly shifting from loosening to tightening or vice versa,” said the directive.

In addition, the Government believes that it is necessary to control the capital mobilization of real estate enterprises on the stock market to prevent speculation and manipulation. In particular, the Ministry of Finance must urgently amend Decree 153/2020/ND-CP of the Government dated December 31, 2020 on the private offering and trading of corporate bonds in the domestic market and offering of corporate bonds to the international market.

At the same time, the Ministry of Finance will coordinate with the State Bank of Vietnam (SBV) to inspect and supervise regulatory compliance on issuance, investment and provision of services related to corporate bonds, especially the private placement of bonds by real estate firms, credit institutions in connection with real estate firms, large issuers of high-rate bonds, loss-making issuers and issuers without collaterals.

Simultaneously, the Government requested relevant authorities to direct and guide fundraising (including bond issuances) of real estate companies on the stock market in accordance with law; enable and facilitate enterprises (with sufficient capacity and good business performance) to mobilize support funds for recovery and development.

Some other solutions of the directive include fostering safe, healthy and sustainable development of the real estate market by building a real estate and land market information system; enhancing disclosure and transparency of construction planning information; promoting housing development for low-income earners and workers; and preventing the division of residential land plots in unlicensed places.

Source: Vietnam Business Forum