Social housing development is room to expand credit and promote growth

Source: Resolution 33/NQ-CP Graphics: Van Chung

PV: Sir, although the Government and the Prime Minister have given many drastic instructions and the banking industry has also made great efforts, the credit growth rate as of early December has only reached more than 9%. In your opinion, what is the main reason why credit flows increased so low?

Dr. Le Xuan Nghia

Dr. Le Xuan Nghia: Low credit growth first shows that the economic situation is still very difficult. Demand in the world market decreased as inflation increased and commodity prices escalated, causing people to tend to save money. Although the unemployment rate in developed countries is not high, after many economic and social events, the trend of minimalist consumption and simplifying needs is being responded to.

This causes Vietnam’s export market to shrink, many businesses have no orders, workers lose their jobs… This also causes domestic consumer demand to decrease. In that context, it is difficult for banks to lend. Previously, the loan to collateral ratio was only about 65 – 70%, now some banks have increased it to 80% and still have difficulty finding borrowers.

PV: However, there are still businesses that say they have difficulty accessing capital and cannot borrow capital when they really need it. Is there a cause of credit blockage from the bank?

Dr. Le Xuan Nghia: Businesses that still have difficulty accessing capital are mainly real estate businesses. The remaining manufacturing, import-export businesses have a narrow market and no orders, so why borrow capital? These are not only situational difficulties due to supply chain bottlenecks like during the pandemic but also long-term difficulties.

First of all, because barriers to entering major markets are becoming increasingly strict and consumer demands are increasingly high. One of the big problems that Vietnamese businesses are facing is the requirement to report greenhouse gas emissions. Many businesses in Vietnam’s major export industries, especially the steel industry, failed to implement this report.

Regarding the reasons on the bank side, there are indeed, as Prime Minister Pham Minh Chinh reminded at the recent Conference to discuss solutions to overcome difficulties in credit growth. At the conference, the Prime Minister pointed out that slow credit growth is partly due to economic difficulties, partly due to the ability to meet credit conditions being somewhat poor, but also poses requirements for credit institutions. Credit institutions need to closely follow the situation, fields, industries and be more flexible in lending conditions, especially collateral… At the same time, it is necessary to evaluate cash flow prospects more and more closely; There are general standards and criteria, priorities, and limitations that are correct, successful, and appropriate.

Therefore, I strongly agree with the Prime Minister’s viewpoint at the recent Conference to review credit conditions, be more flexible, and closer to the situation. To do so, banks must improve their ability to appraise projects, to better assess customers’ ability to repay debt, thereby creating flexible and favorable conditions for people and businesses to access capital. only care about collateral.

PV: Low credit growth rate affects GDP growth rate. According to him, in the current difficult economic context with low consumer and investment demand, is there any room left to promote higher credit growth, thereby promoting economic growth?

Dr. Le Xuan Nghia: As the Prime Minister said, credit growth is driven by both the supply and demand sides, not just one side. The credit growth rate is often twice the economic growth rate.

To promote credit, among the tasks and solutions that Prime Minister Pham Minh Chinh recently requested, I think there is a more important and feasible solution: the field of social housing. The current need for social housing is huge. People have needs and have the ability to pay, but the projects that the Government has planned for social housing are hardly implemented.

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The main reason, in my opinion, is policy limitations. Policies for social housing need to be revised in a way that does not require businesses to be responsible for policy issues, such as reviewing documents and subjects. In addition, because these projects are land without land use fees, banks do not dare to accept them as collateral… Furthermore, this field is also subject to many cumbersome and complicated regulations for both people, businesses and banks.

If these problems can be resolved and the social housing market can be “unleashed”, the real estate market will recover quickly and balance, credit will be pumped into the market in a healthy direction, thereby contributing to promoting growth. promote economic growth.

On the contrary, if social housing cannot be removed, the real estate market, if it recovers, will only be in the high-end housing segment, mainly speculative, with a surplus of houses priced at hundreds of millions of dong. per square meter. Millions of low-income working people will find it increasingly difficult to reach their dream of owning a home.

PV: Thank you Sir!