Do not let bad debt clot remain
At the end of April 2023, the State Bank issued Circular 02 regulating the restructuring of debt repayment terms and maintaining debt groups by credit institutions and foreign bank branches to support customers in difficulty, promptly remove difficulties and obstacles for business households and enterprises, focus resources on production and business, and increase access to capital.
After a period of implementation, many businesses have responded positively to this new Circular of the State Bank. In an interview with Nguoi Dua Tin , Mr. Mac Quoc Anh - General Secretary of the Association of Small and Medium Enterprises of Hanoi City said that the extension and postponement of old loans is very important in the current situation, helping businesses reduce some business costs, avoid jumping into debt groups in new loans, and the credit rating will also increase.
In addition, the production and business process of the enterprise is also more stable to solve problems related to inventory, from which, the profit growth rate will also be more positive.
“In the general difficulties of the whole market, Circular 02 will help businesses from cement, steel, wood, electricity, as well as the industry considered the “key” of the economy, real estate,” Mr. Quoc Anh commented.
According to Mr. Quoc Anh, thanks to Circular 02, businesses can access new loans more easily because their old debts will not be overwritten or turned into bad debts.
Mr. Mac Quoc Anh - General Secretary of the Association of Small and Medium Enterprises of Hanoi City.
The debt deferral policy will partly help businesses overcome capital difficulties in both short-term goals to create a continuous production and business cycle, while also aiming to access medium- and long-term capital sources.
“If the bad debt clot is allowed to persist and spread from the real estate and bond sectors to finance and credit, the effect of the decline in market confidence in real estate businesses will continue to spread to all businesses in other sectors. This makes it impossible for the bond mobilization channel to help businesses attract short-term investment to solve urgent problems,” said Mr. Quoc Anh.
The stock market has also been strongly affected, making the capital difficulties of enterprises even more serious. In the context of affected confidence, lack of working capital, and lack of investment flows, enterprises' assets are at risk of being sold off.
Therefore, the above-mentioned debt deferral and extension policies of the State Bank, in sync with the capital market unblocking solutions of the Ministry of Finance, are considered timely.
However, according to Mr. Quoc Anh, in order for these policies to truly come into practice and have the effect of relieving economic congestion, it is necessary to implement many synchronous fiscal and monetary solutions, as well as improve market transparency, the business environment and the competitiveness of the economy and each industry and enterprise.
More solutions needed for corporate bonds
In addition, many real estate businesses believe that, in addition to Circular 02, there should be another solution to solve the current difficulties of this industry. Regarding the effective period of Circular 02, Mr. Mac Quoc Anh hopes that this Circular will be extended to maintain the recovery capacity of businesses in particular and the economy in general.
Speaking to Nguoi Dua Tin , a representative of Hung Thinh Corporation said that the new regulations are good for businesses and the real estate market. However, many overdue debts previously could only be resolved by about 50%. Because businesses' loans from banks only account for about 1/4 of their debt, while 3/4 is bond debt. Therefore, to solve the difficulties of businesses, it is necessary to add a solution for corporate bonds.
Therefore, this representative proposed that the State Bank allow commercial banks to lend to enterprises issuing bonds that are about to mature to restructure their bonds' debts that are about to mature, with the loan amount that can be considered not to exceed 70% of the value of the issued bonds. At the same time, bondholders are allowed to mortgage bonds to borrow money from banks at 70% of the value.
In addition, banks need to expand lending room because businesses are still having difficulty accessing capital. In the long term, the State needs to quickly remove legal obstacles for businesses and projects so that products can be brought to market soon to generate cash flow. When there is cash flow, all of businesses' difficulties will be resolved.
Circular 02 was issued to help businesses have a chance to recover.
“The State Bank should continue to direct commercial banks to consider reducing lending interest rates more substantially and, more importantly, create conditions for businesses, including real estate businesses and home buyers, to access credit more easily. It is necessary to allow similar application of the pilot mechanism for transferring real estate projects according to Resolution 42 of the National Assembly on piloting bad debt settlement of credit institutions, so that businesses can negotiate the transfer of real estate projects according to their needs," he proposed.
The representative of Novaland Group also proposed that the State Bank should allow real estate enterprises to restructure, extend, and grant grace periods for debts due within 3 years and not be transferred to debt groups. Credit institutions should consider reducing interest rates and extending the term of bonds for real estate enterprises for 3 years to reduce pressure and increase confidence in the market .
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