The International Finance Corporation (IFC), a member of the World Bank Group, announced on Monday it is providing a financing package of US$75 million to Phu My Hung Development Corporation to help sustain its property development operations, in the wake of COVID-19 impacts.
The investment is expected to allow the company to extend financial relief to clients, suppliers, and contractors along its property value chain, helping preserve jobs and contributing to a resilient local economy, IFC said in its press release.
The sister organization of the World Bank said that the bond is its first COVID-19 response project in Vietnam.
It comes under the Real Sector Crisis Response Facility, which will provide $2 billion globally for IFC’s existing clients in healthcare, infrastructure, manufacturing, agriculture, and service industries to cope with the pandemic.
Overall, IFC will provide $8 billion COVID-19 fast-track financing to support the private sector and preserve jobs across the world.
The latest support comes after IFC helped Phu My Hung in 2019 expand its housing projects in Vietnam’s secondary provinces, aiming to improve local residents’ access to quality housing as well as education and healthcare services.
“This funding will bolster Phu My Hung’s ability to cope with the challenges emerging from the COVID-19 pandemic including demand and supply chain disruptions,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Laos.
Phu My Hung, an established real estate developer in Vietnam, supplies housing mainly in Ho Chi Minh City and also leases office and retail space to more than 300 businesses, most of which are small and medium enterprises.
Business disruptions caused by the impact of COVID-19 have affected the real estate developer’s clients, including lessees, homebuyers, suppliers, and contractors, according to IFC.
“Local businesses are the primary engines of job creation, which drive the national economy. With the COVID-19 situation, IFC’s support will enable us to extend financial relief to our local clients,” IFC quoted Gary Tseng, CEO of Phu My Hung, as saying.
Having successfully contained the pandemic, Vietnam is now addressing the impacts of COVID-19 on its economy, especially in trade, services, and construction, the three hardest hit sectors.
In February, IFC had increased trade finance limits for Vietnamese banks as a rapid response initiative to address, in advance, potential trade finance challenges triggered by the COVID-19 outbreak.
Vivek Pathak, IFC regional director for East Asia and the Pacific, said that leveraging its experience from past shocks, the corporation aims to harness the private sector to limit economic damage.
The World Bank Group’s member attaches a lot of importance to supporting local businesses in times of crisis, for they are the main drivers of employment in emerging economies, according to Pathak.
“IFC’s support, an effective response to help ensure resiliency, shows our confidence in local businesses as well as our commitment to restore Vietnam’s economy to a sustainable growth path post-pandemic,” Pathak said.