Businesses still have difficulty accessing credit support packages.

Recently, the State Bank continued to launch a credit package of 120,000 billion VND to solve difficulties for the real estate market. However, the implementation shows that there are many obstacles that make it difficult for businesses and people to access.

Customers borrow capital at the Transaction Office of the Bank for Agriculture and Rural Development (Agribank). Photo: Nguyen Hai

2% interest rate support package: Efficiency not commensurate with efforts

Implementing Decree 31/2022/ND-CP dated May 20, 2022 of the Government on interest rate support from the state budget for loans of enterprises, cooperatives, and business households, the State Bank issued Circular 03/2022/TT-NHNN, then the People's Committee of Nghe An province issued Document No. 3769/UBND-KT dated May 27, 2022 guiding implementation.

Based on the guidance documents, the State Bank - Nghe An Branch and commercial banks organize the posting and answer questions related to2% interest rate support package; At the same time, banks are required to promptly and synchronously implement, unify, publicize, transparently, and in accordance with regulations, objects, and purposes, to prevent risks and policy exploitation; and not to lower standards or loosen credit conditions during the process of lending to support interest rates.

Based on monitoring and actual work, periodically weekly, monthly or ad hoc, the State Bank - Nghe An Branch updates progress, implementation results... to have timely instructions.

Regarding the 2% interest rate support package, to effectively implement it to the right subjects, the State Bank - Nghe An Branch also proactively coordinated with local business and entrepreneur associations to review and grasp the situation to direct banks to consider timely and satisfactory handling for businesses; report to the State Bank of Vietnam on difficulties and problems beyond its authority.

The conference connecting banks and enterprises was organized by the Southeast Economic Zone in coordination with the State Bank and the Department of Industry and Trade. Photo: Nguyen Hai

In October 2022, the State Bank Branch coordinated with the Department of Industry and Trade and the Southeast Economic Zone Management Board to organize a conference connecting banks and businesses, with the participation of 39 commercial banks, representatives of business associations and 140 businesses and investors in the province to receive and listen to feedback from businesses in the process of accessing banking services, especially the 2% interest rate support program.

Since then, commercial banks in the area have seriously implemented the program, promptly supporting businesses that wish and are eligible for support in accordance with regulations.

However, the implementation of the 2% interest rate support package in Nghe An has revealed difficulties and shortcomings. The nature of this interest rate support package is aimed at "hurt" businesses, cooperatives and business households, but the condition must be "recoverable", so it is difficult for banks to identify and evaluate.

Besides, if the enterprise borrows in USD or the business line is not in the regulated industries or fields, it will not be supported under Decree 31.

In addition, the enterprise has not provided sufficient documents, for example, it cannot issue VAT invoices to prove the purpose of capital use; the customer is a small business household and does not have a Business Registration Certificate; the business plan is not feasible...

While domestic enterprises are struggling with social housing projects, FDI enterprise Lux share - ICT Company at VSIP Nghe An 1 Industrial Park has completed housing for workers and experts to live and rent. Photo: Nguyen Hai

On the other hand, according to some businesses, the interest support package is not large, only 2% of the total interest that businesses, cooperatives, and business households that borrow capital must pay, but the regulation requiring the provision of records and information on production and business performance results and, if necessary, inspection, examination, and auditing teams to work is something that few businesses want.

For this reason, Song Lam Cement Joint Stock Company initially applied for a 2% interest rate support package with a loan amount of over 400 billion VND, equivalent to an interest rate support amount of over 100 million VND, but after completing the rather cumbersome procedures, it withdrew its application and did not borrow again.

After 1 year of implementing the 2% interest rate support package under Decree 31/CP, the whole country has disbursed 330 billion out of a total of 40,000 billion VND. Previously, due to many problems, the State Bank proposed to amend Decree 31 to create more favorable conditions for implementation, but it is expected that only 2,345 billion VND will be disbursed, and up to 37,521 billion VND is expected to remain undisbursed.

Representative of State Bank - Nghe An Branch shared

Those who buy old apartment buildings after renovation can also access the 120,000 billion VND support package. Photo: Nguyen Hai

Narrowing down the target group for the 120,000 billion VND preferential loan package

The market's expectation during the discussion and introduction of the 120,000 billion VND preferential credit package is that not only businesses and investors but also people with stable and average incomes when building houses will have access to this credit package with low interest rates of 1.5-2% compared to normal loan interest rates.

However, when Resolution 33/NQ-CP was issued and then Document No. 2308/NHNN of the State Bank, only those who bought social housing, workers' housing orinvestor of the project to renovate and rebuild old apartments… according to the approval of the new construction industry to borrow capital.

The above regulation has disappointed many customers. Document No. 2308 of the State Bank was issued on April 1, but it was not until April 20, 2023 that the Ministry of Construction issued Document No. 1551/BXD-PLN on guidance on determining the list of projects, subjects, conditions, and criteria for preferential loans for the development of social housing, workers' housing, renovation, and reconstruction of apartment buildings, in which, the Provincial People's Committee is authorized to be responsible for reviewing and checking legal procedures, making a list of projects for the construction of social housing, workers' housing, renovation, and reconstruction of apartment buildings. This list is publicly announced on the Provincial Electronic Information Portal so that banks have a basis to apply for loans under the 120,000 billion VND credit program.

Housing area for workers of Trung Do Joint Stock Company built in 2014. Photo: Nguyen Hai

Mr. Vu Ngoc Nhan - a workerVSIP Industrial ParkCurrently renting a house in Hung Tay and Hung Nguyen areas, shared: Even if the project list is approved, the average salary is only 6-8 million VND/worker/month; if including both husband and wife, it is about 15 million VND/month and each social housing and low-income housing unit costs from 7-10 million/m2.², interest rate 8.2%/year and interest support for only 5 years is very difficult to access and borrowing is difficult to repay.

A representative of the State Bank said: Currently, the Department of Construction is submitting to the Provincial People's Committee for review and approval of the list of social housing and worker housing projects in the area that are eligible for loans under Resolution No. 33/NQ-CP, so in Nghe An, there are no projects that are eligible for approval and have not yet incurred outstanding debt under the 120,000 billion VND package.

The land for social housing construction in Nghi Xa, Nam Cam Industrial Park of Kim Thi Real Estate Company has completed the procedures for land acquisition, compensation and site clearance, but the construction progress is still slow. Photo: Nguyen Hai

Removing barriers, increasing access to capital

To remove difficulties related to the real estate sector, after issuing document No. 359/NGA-THKS dated April 4, 2023 implementingsocial housing loan program, worker housing, renovation and reconstruction of old apartmentsPursuant to Resolution 33/NQ-CP dated April 25, 2023, the State Bank, Nghe An Branch, continues to issue Document No. 474/NGA-THKS on credit granting for the real estate sector, including a credit package of VND 120,000 billion to credit institutions and commercial banks to issue detailed guidance documents.

However, according to a representative of a commercial bank in the Northern Nghe An region, like the 2% interest rate support loan package of Decree No. 31/2022, the VND 120,000 billion credit package also faces difficulties in ensuring procedural conditions, so commercial banks and customers are facing difficulties. To solve this problem, it is necessary to expand the target group or convert the source to other more suitable support policies.

Meanwhile, Mr. Nguyen Dinh Dung - Director of Kim Thi Real Estate JSC shared: Although he really wants to access the preferential interest rate loan package of 120,000 billion VND, the interest rate of 8.7%/year and incentives in the first 3 years should be considered.

Housing rental conditions for workers in Bac Vinh Industrial Park are quite cramped and difficult, so the need for loans to rent or buy houses to improve living and settling conditions is very large. Photo courtesy

Recently, to resolve difficulties and help low-income workers access loans to buy and rent social housing, the Prime Minister signed and issued Decision No. 486/QD-TTg on May 10, accordingly, from May 10, 2023 to December 31, 2024, borrowers buying social housing through the Policy Bank will enjoy an interest rate of 4.8%/year.