Why is the 30,000 billion VND support package disbursed slowly?

(Baonghean) - The VND30,000 billion support package was launched by the Government to rescue the real estate market and at the same time meet the demand for capital to buy houses for low-income people. However, the disbursement progress of this credit package is currently very slow. While the VND30,000 billion package has not been effective, recently there has been more information about the VND50,000 billion credit package provided by a consortium of commercial banks to support construction enterprises. Public opinion is questioning whether it is feasible or will it repeat the "mistake" of the VND30,000 billion package?

After a period of research and meeting all the loan conditions of individual customers, Ms. Nguyen Thi Yen in Vinh City was able to borrow 400 million VND from preferential capital sources under the 30,000 billion VND support package at Vietcombank Trung Do branch. Both her husband and she are civil servants, their monthly salaries only cover living expenses and save a small amount to repay the bank loan. Ms. Yen shared: Thanks to the preferential policies of the State, my husband and I were able to buy an apartment to live in, the repayment period was extended to 15 years, so we were not under pressure to repay the loan.

Mr. Vo Khac Thanh - Head of Vietcombank Trung Do Customer Service Department said: As of March 24, 2014, at the branch, there were 7 individual customers who had received loans (package of 30,000 billion VND) to buy houses, with outstanding loans of nearly 3 billion VND. In addition, there are currently 3 more customers whose applications are being received and waiting for capital disbursement. Since the beginning of the year, there have been 6 cases of customers coming to the branch to inquire about loans, of which 4 customers have accessed capital, while 2 cases are not eligible for loans. The bank itself really wants to increase lending capital to ensure credit growth targets and speed, but because customers do not meet the prescribed conditions, the bank does not dare to "cross the line" to lend for fear of risks.

Transaction at Vietcombank Vinh branch.

In fact, in Nghe An, there are not many customers who can access preferential capital sources like Ms. Yen and some other customers, because the loan conditions are very strict. Although "the State Bank is always ready with a full source of capital of 30,000 billion VND with low interest rates and long terms to meet the lending needs of banks' programs", in reality, to put this capital into the hands of those who need it is not simple at all. Right at the Joint Stock Commercial Bank for Investment and Development of Nghe An (BIDV), so far only 1 individual customer has been able to borrow capital, with an amount of less than 100 million VND. According to Mr. Hoang Hai Nam - Deputy Head of BIDV Nghe An's individual customer department: The reason for the slow disbursement of the 30,000 billion VND support package is that most of the loan applications eligible for support do not meet the conditions according to Resolution No. 02 of the Government and Circular No. 11 of the State Bank.

According to regulations, for corporate customers "whose purpose is to borrow capital to pay for unpaid expenses arising from January 7, 2013 to implement social housing construction projects, commercial housing projects that have converted their functions to social housing projects". However, in reality in our province, some projects that started construction before 2013 still come to the bank to apply for access to this credit package, even investors and customers coordinate with each other to legalize house purchase contracts after January 7, 2013. All of these cases, after appraisal, are not eligible for loans. Since the policy of lending the 30,000 billion VND support package was issued, at BIDV Nghe An, there have been about 40-50 customers coming to apply for loans, but most of them are not eligible for loans, only one case meets the conditions, the branch has disbursed. And in the near future, the branch is likely to disburse 30 billion VND for the social housing project in Nghi Kim commune of Truong Son Construction Investment Joint Stock Company.

Similarly, the slow disbursement of the VND30,000 billion support package occurred at all five state-owned commercial banks authorized to disburse this capital source, including: the Bank for Agriculture and Rural Development, the Joint Stock Commercial Bank for Investment and Development, the Joint Stock Commercial Bank for Industry and Trade, the Joint Stock Commercial Bank for Foreign Trade, and the Mekong Delta Housing Development Joint Stock Commercial Bank.

Ms. Luong Thi Lieu - Deputy Director of the Mekong Delta Housing Development Joint Stock Commercial Bank said: The capital source is available, abundant liquidity, and we really want to lend to boost credit growth, but customers must ensure that they meet the conditions and have reasonable documents. The bank is always ready to disburse to eligible subjects. By the end of February 2014, the branch had disbursed capital to 5 customers with a loan amount of more than 2.3 billion VND. In March, 3 more customers had their documents accepted, with a loan demand of nearly 2 billion VND. For any project area that converts its function from commercial housing to social housing, the Department of Construction needs to quickly complete procedures so that banks have a basis to lend capital to both corporate and individual customers.

In reality, although the Government's policy is to stimulate the real estate market and support low-income people to buy houses, in order to ensure liquidity and avoid risks in capital sources, credit institutions pay special attention to customers' ability to repay both principal and interest, so that loans do not become bad debts.

For businesses investing in social housing construction, it is also not easy to access this support package because the lending conditions are very strict. Mr. Nguyen Dinh Khang - leader of Minh Khang Trading Company Limited shared: Our social housing construction project consists of 3 houses, but currently we are having difficulty with capital, so the immediate plan is to build 1 house with about 70 apartments. After completing the foundation, the unit will mobilize capital from those who register to buy houses to invest in construction.

To date, in Nghe An, there are 5 social housing projects that have been approved by the Ministry of Construction to be included in the list of projects eligible for loans from the 30,000 billion VND package according to Resolution No. 02 of the Government. Of the 5 projects, 3 projects have been converted from commercial housing to social housing, with the total amount of loans proposed by the Ministry of Construction for these 5 projects being 330 billion VND. The above 5 projects have about 1,400 social housing units, and currently all 5 projects have not been granted construction permits.

The disbursement progress of the 30,000 billion VND support package in Nghe An is slow and difficult, partly because at the time of implementing this incentive package, social housing projects in the province had only just started construction, or had to stop construction due to lack of capital, and had not yet completed construction; the fastest social housing project that could hand over houses would not be completed until the end of 2015. This led to problems with mortgage procedures when borrowing capital. Furthermore, the price of social housing is still high, the minimum level is 10 million VND/m2, according to regulations, only those who buy social housing with an area of ​​less than 70m2 and a selling price of less than 15 million VND/m2 can borrow the support package. Thus, the cheapest apartment costs 600 - 700 million VND, with this level, even if low-income people can access capital, their ability to repay the debt will be difficult. The lack of social housing supply, coupled with high housing prices and low workers' incomes, are also reasons why people are not interested in social housing.

While the real estate market is frozen, cheap, land fund in our province is quite abundant; Vinh City still has few industrial parks, industrial clusters, factories, so the number of workers attracted is not much, so in fact, the demand of home buyers is not really "tense" like in some big cities. Workers with a salary above or below 3 million VND/month still find it very difficult to reach a social house with the current high price. Recently, the State Bank has decided to adjust the lending interest rate from 6%/year to 5%/year to support businesses and individuals to reduce investment costs, interest payments on loans to buy social housing. In order for people and low-income people to be able to access this meaningful loan, representatives of some credit institutions said that management agencies need to flexibly adjust the rules; social housing project investors need to offer products suitable to the market and people's needs.

In the past time, the State Bank of Nghe An province branch coordinated with the Department of Construction to grasp the demand for social housing and social housing projects in the area and directed credit institutions to provide housing support loans according to Resolution 02/NQ-CP, however, the supply of social housing and commercial housing according to the standards of the Ministry of Construction is still lacking compared to the actual demand. Therefore, outstanding loans for this sector are still very low. By the end of February 2014, in Nghe An, credit institutions provided housing support loans according to Resolution 02/NQ-CP, with outstanding loans of more than VND 8.2 billion with 23 individual customers receiving loans. It is known that by the end of February 2014, within the framework of the VND 30,000 billion credit package, localities nationwide have only disbursed loans to 2,673 customers with a total outstanding loan of VND 1,206 billion. The purpose of the 30,000 billion VND support package is very humane, however, the difficulties in the implementation make the disbursement of this program currently just a "drop in the ocean" compared to the actual needs. However, this is a large-scale and long-term program, unprecedented, so when implementing it, it is inevitable that there will be some difficulties and problems that make the program's progress not meet the expectations of society. Hopefully, in the coming time, relevant sectors will strengthen coordination and promptly remove difficulties and problems so that this meaningful program can meet the expectations of society.

While the 30,000 billion VND credit package is slowly disbursing, recently, public opinion has been stirred up about the 50,000 billion VND credit package. The operation of this credit package is a combination of 4 parties: Bank - investor - contractor - construction material supplier, the main service object is real estate projects that are under construction but lack capital. This is essentially a normal credit program of commercial banks, this new credit package is only different from previous loan packages in that it does not require collateral, meaning that the investor uses materials provided by a party in the supply chain, the bank will price the goods and then lend at a certain rate of about 70%. However, there is currently no specific operating mechanism for this credit package, some commercial banks themselves listed in the list of 10 banks that disburse capital are surprised to be on the list. Public opinion is skeptical about this huge credit package. If banks do not expand the scope to include more material suppliers and construction units, it is feared that interest groups will form in this alliance. And its effectiveness is still very fragile.

Quynh Lan