LESS RISKS WON'T HARM PROPERTY MARKET: SBV

He made the statement to reassure real estate insiders amidst fears that the new regulations would have negative impacts on the real estate market which has seen signs of recovery.

In a draft document from the central bank circulated for public opinions, the risk index of receivable lending for real estate and securities would be raised from 150 per cent (the lowest level) as stipulated in Circular No 36 to 250 per cent.

The maximum ratio of short- term funds used for medium and long term loans would be reduced from 60 per cent to 40 per cent.

Chairman of the Viet Nam Real Estate Association Nguyen Tran Nam said that since Circular No 36 had come into effect a year ago, the number of transactions in the housing market increased, proving that there was considerable demand for houses.

Outstanding loans in the housing sector were still under control, Nam added, and suggested that the circular be unchanged at the moment.

Pham Duc Toan, general director of the EZ Viet Nam Real Estate Development and Investment Company, said that the amendments would make it difficult for property investors and traders to get loans, which could increase house prices.

Good sentiments

Contrary to the opinions of real estate developers, the amendments received praise from experts and commercial banks.

Nguyen Thi Kim Thanh, member of the Board of Director of the Bank for Investment and Development of Viet Nam (BIDV) and former head of the SBV's Monetary Policy Department, said that the new policy was an indirect method that the SBV could apply to prevent a bubble in the real estate market.

"I think that the market now is over supplied as too many projects are underway while people who have real demand for a house can not afford one due to their low income.

"Housing enterprises must find ways to adapt themselves to new economic and policy conditions," Thanh said.

HSBC Viet Nam General Director Pham Hong Hai said to Thoi bao Kinh te Viet Nam (Vietnam Economic Times) that this was a signal to housing enterprises that they should be more cautious.

"The change in risk index of receivable lending for real estate (250 per cent) is suitable, because a large amount of capital has been poured in the real estate sector."

Enterprises should look at both the supply and demand sides of the market to ensure efficient performance, Hai added.

Good decision

Chau Dinh Linh, a lecturer at the Banking University of HCM City, said that implementing the amendments would be a good decision.

"The new regulations would help not only prevent risks from the property market but also redirect the capital flow in the financial market. We have relied too much on the monetary market as a capital supplying channel while the capital market including bonds and securities is underdeveloped.

"The country's economic development does not depend only on the real estate sector, but on the real production and consumption," Linh said.

"If real estate developers want to have sustainable businesses, they should not count on short-term capital sources to do medium- and long-term investment projects," he added.

Anh said that the amendments were drafted to ensure the banking system's health. If the banking system was not exposed to excessive risks, then enterprises would find it easier to access loans, he explained.

Fire rekindled

According to Anh, monetary policy was not the only way to boost the real estate market's development. He said that the market had got out of the worst situation and real estate companies should not count on bank capital.

Banks have completed their role in "rekindling the fire" and it is necessary to have policies to lure capital from other sources such as foreign investment or remittances into this sector.

A long-term and stable property market needed the consistent implementation of many policies such as fiscal, tax and land.

The SBV official said that they had predicted the response of stakeholders when issuing the draft amendments. However, the SBV would do further research before a final decision and draw a roadmap for the market to have time to adapt, Anh stressed.

Source: VIR


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