Governor gives reason for disbursing only 105 billion/120 trillion in social housing loans

Disbursement progress is too slow

Answering questions before the National Assembly about the progress of disbursement of the VND120,000 billion credit package for social housing loans on the morning of November 6, Governor of the State Bank of Vietnam Nguyen Thi Hong said that recently, 18/63 provincial People's Committees have announced projects participating in the program with 53 projects. To date, VND105 billion has been disbursed for 3 projects in 3 provinces/cities.

Carrying out the tasks according to the Government's Resolution towards the target of 1 million apartments in the next 10 years, the credit package of 120,000 billion VND uses money from credit institutions, preferential interest rates are also from banks. There are 4 banks voluntarily participating including Agribank, Vietcombank, VietinBank and BIDV, each bank committed to disbursing 30,000 billion VND.

The State Bank has issued a document instructing these four banks to implement it; at the same time, it has sent a document to the People's Committees of the provinces and cities interested in announcing projects eligible for loans under this credit package. The State Bank requires banks to issue internal procedures for implementation.

However, Governor of the State Bank of Vietnam Nguyen Thi Hong admitted that disbursement is limited due to the limited supply of housing.

According to the Governor, the demand for housing is large, but the need to borrow to buy a house is an issue that people consider carefully.

The lending conditions still have some unsuitable points. On the other hand, the program will be implemented for a long period of 10 years, and at the same time, it will be expanded to commercial banks to participate, so the value of this loan package will be increased. Currently, some banks have participated in this credit package with a value of 5,000 billion VND.

“In the past, the disbursement of credit packages was limited due to the limited supply of housing. The demand for housing is high, but the need to borrow to buy a house is an issue that people consider carefully. There are still inappropriate points in the lending conditions,” said Governor Nguyen Thi Hong.

The State Bank of Vietnam recommends that the People's Committees of provinces and cities soon announce the list of projects eligible for loans. At the same time, the State Bank of Vietnam will increase information dissemination so that people are fully aware.

*Governor of the State Bank of Vietnam Nguyen Thi Hong answered questions before the National Assembly on the morning of November 6. (Photo: quochoi.vn).*

Investors are not interested either.

According to the Government's report to the National Assembly, by the end of September 2023, the whole country had completed 46 social housing projects in urban areas, with a scale of about 20,210 units; 419 projects are being implemented, with a scale of about 392,635 units.

It can be seen that the disbursement progress of this credit package is too slow. However, difficulties and obstacles come from many sides, including banks, investor enterprises, local authorities, and even borrowers.

In early July 2023, the Ho Chi Minh City People's Committee announced 6 eligible projects with a total expected loan of VND 2,776.7 billion. Of these, there are 3 social housing projects for low-income people with a total expected loan of VND 910 billion; 1 social housing project for workers to rent with an expected loan of VND 700 billion; and 2 projects to renovate and rebuild apartments with a total expected loan of VND 1,166.7 billion.

However, of the 6 projects mentioned above, only the social housing project for workers to rent in the Industrial Park in Thanh My Loi Ward, Thu Duc City, invested by ThuThiemGroup Joint Stock Company (ThuThiemGroup Company), has been committed to lending by the bank.

Specifically, BIDV Bank - District 7 Branch has appraised and agreed to provide credit to ThuThiemGroup Company under the 120,000 billion VND credit program with a maximum loan limit of 585 billion VND.

However, BIDV said that the investor, ThuThiemGroup, has not yet requested to disburse funds to implement the project, so it has not yet signed a credit contract and guarantee contracts with the bank as prescribed. The bank said that it will disburse funds after the project owner completes and provides all relevant documents.

Meanwhile, a business representative told VietNamNet that when receiving appraisal documents, banks have their own regulations on loan conditions to ensure debt recovery.

According to this person, the bank's regulations for social housing and worker housing project owners require a certificate of land use rights. Meanwhile, according to the Land Law, organizations that are allocated land by the State without collecting land use fees do not have the right to mortgage.

Therefore, investors cannot use the social housing project land as collateral to borrow from banks but must use other assets even though the project has been cleared by the investor and converted to social housing project land according to the planning.

The representative of this enterprise also said that most social housing project investors, after having a decision to allocate land or change land use purpose, have not yet completed the procedures for granting certificates, so they are not eligible for loans.

In an interview with VietNamNet in early October, Ms. Phung Thi Binh, Deputy General Director of Agribank, said that although many projects are being approached, the implementation process is facing many difficulties in resolving legal procedures, causing businesses to waste a lot of time during implementation.

Ms. Binh said that businesses are not interested in participating in projects under this credit package because their profit margin is limited to no more than 10%. Moreover, the selling price and home buyers are selected by the departments and agencies of the province/city where the project is located.

“If the project is just behind schedule, the investor will not make a profit, so they are not interested in participating in projects like this,” said Ms. Binh.

Source