Minister of Finance: Need to regulate capital mobilization when granting real estate business licenses

This is one of six groups of solutions proposed by Minister of Finance Ho Duc Phoc to stabilize and develop the corporate bond market at the National Online Conference to promote the healthy and sustainable development of the real estate market on the morning of February 17.

Minister of Finance Ho Duc Phoc. Photo: VGP/Nhat Bac

In addition to requiring businesses to pay principal and interest on bonds due in accordance with regulations, the Minister also requested that if businesses have difficulty in payment, they must work and negotiate with investors to agree on a bond restructuring plan.

The leader of the Ministry of Finance also said that the Ministry is submitting to the Government for consideration the issuance of a Decree amending and supplementing a number of regulations in Decree No. 65 on the issuance of individual corporate bonds to contribute to solving current difficulties in the bond market.

At the same time, review and perfect the policy mechanism for developing professional investors and long-term investors (investment funds) to create sustainable investment demand for the market.

In addition, the Ministry of Finance directed the Stock Exchanges to urgently build and put into operation a system for trading individual corporate bonds to develop a transparent and safe secondary market, enhance management and supervision capabilities, and minimize risks.

“In addition to solutions to stabilize and develop the corporate bond market, it is necessary to continue to synchronously deploy policy mechanisms to firmly consolidate a stable macro foundation, supporting the market in general, including the real estate market,” said the Minister.

The head of the Ministry of Finance also pointed out the current situation that recently, many real estate businesses with limited resources have been licensed to implement many projects with scales many times larger than their financial capacity, while depending mainly on loans, bond issuance or mobilization from home buyers.

This situation leads to business risks as well as cash flow risks, potentially posing liquidity risks in the financial market, bank credit as well as the corporate bond market.

Faced with the above situation, in order for the real estate market to develop stably and healthily, the Ministry of Finance recommends reviewing and amending policy problems in the Land Law, Housing Law, and Real Estate Business Law to enhance the effectiveness of market management, creating conditions for the development of a stable and transparent real estate market.

In the immediate future, according to the Minister of Finance, it is necessary to review legal difficulties and problems so that real estate businesses can immediately implement unfinished projects and projects that have not been implemented due to legal problems, thereby quickly putting projects into operation, selling products, and solving financial and capital difficulties;

Along with that, research and develop regulations on financial safety indicators in the construction and real estate sectors, including indicators on capital mobilization limits when licensing real estate business activities, licensing investment projects, and real estate business to ensure that enterprises have sufficient financial capacity to implement projects.

"Businesses should bring real estate prices to a suitable level"

Speaking at the conference, Vietcombank (VCB) General Director Nguyen Thanh Tung said that in addition to capital from credit institutions and capital mobilized from buyers, for the remaining capital needs, real estate project development enterprises currently mainly rely on bond issuance - this is a suitable source of capital mobilization for real estate.

However, the issuance of corporate bonds in recent times has had many shortcomings, leading to liquidity risks in the corporate bond market as well as the ability of real estate enterprises to continue raising capital through this channel, greatly affecting the ability to develop and complete real estate projects.

VCB representatives recommended that the Government have solutions to quickly stabilize and develop the bond market healthily in order to contribute to creating a medium- and long-term capital channel, creating a sustainable source of capital for the real estate market, and at the same time reducing pressure on capital supply from the credit channel.

Ministries, branches and localities speed up the licensing process for projects, clear legal and administrative obstacles and encourage product development to reach real buyers at reasonable prices.

“Real estate businesses should cut costs and bring prices to a level that is appropriate to the market. It is necessary to restructure and restructure products towards real needs, affordable commercial housing segments, and low-income housing for healthier and more sustainable development,” said Mr. Tung.