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Vietnam construction ministry explains why $5.14bn credit package yet to be disbursed

Vietnam construction ministry explains why $5.14bn credit package yet to be disbursed

Thursday, June 08, 2023, 08:24 GMT+7
Vietnam construction ministry explains why $5.14bn credit package yet to be disbursed
This image shows the Vinh Loc A social housing project in Binh Chanh District, Ho Chi Minh City. Photo: T.T.D. / Tuoi Tre

Vietnam's construction ministry has raised two reasons for the non-disbursement of the credit package of VND120 trillion (US$5.14 billion) launched by the government about two months ago for developing projects to build social housing and homes for workers, and upgrade deteriorated apartment buildings. 

In a recent report to the prime minister in relation to the credit package, the ministry said around 100 projects for building social houses and homes for workers have been licensed for construction but local authorities have yet to publicly announce lists of specific projects.

Therefore, banks related to this package have not been able to provide loans for investors and buyers in such projects, the ministry said.

The second reason that blocked the disbursement of the package is that most of these projects have yet to be ready for implementation as they remain in the completion stage for investment procedures.

Earlier, at a recent conference on building one million social houses in the 2021-30 period, Deputy Minister of Construction Nguyen Van Sinh said a number of local construction departments were asked to submit official lists of projects eligible to benefit from the credit package to local administrations for approval and posting on the local portals.

Binh Dinh Province has set up six projects at a cost of about VND5,345 billion ($228.8 million) and needs a total loan of VND1,832 billion ($78.3 million).

Phu Tho Province needs to lend VND441 billion ($18.8 million) to three projects valued at VND818 billion ($35 million).

Da Nang City has reported three projects worth VND2,046 billion ($87.6 million) and requires a loan of VND545.6 billion ($23.3 million).

Bac Giang needs to borrow VND4,527.6 billion ($193.5 million) for two projects worth VND6,164 billion ($263.8 million). 

Tra Vinh has prepared two projects totaling VND1,492 billion ($63.8 million) and wants a loan of VND420 billion ($18 million).

To date, 41 social housing projects in urban areas of many localities have been completed, providing 19,516 units, according to the ministry. 

Currently, 294 other social housing projects are being deployed and expected to provide more than 288,000 houses upon completion, the ministry added. 

These projects are aimed at offering accommodation to workers in industrial parks and social houses to low-income people in urban areas.

In early April, the Vietnamese government assigned the State Bank of Vietnam (SBV) to deploy this credit package, which is part of the government’s solutions to develop social housing, helping boost the safe, healthy, and sustainable development of the real estate market.

The SBV has been asked to direct commercial banks, mainly four state-owned banks – the Vietnam Bank for Agriculture and Rural Development (Agribank), the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), and the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) – to offer loans with interest 1.5-2 percentage points lower than average lending rates.

The loans will be provided for investors and buyers of social housing, houses for workers, and old apartment rebuilding projects.

The SBV was also assigned to coordinate with the construction ministry and other relevant ministries and agencies to establish the criteria for eligible projects and beneficiaries of the credit package.

According to the ministry, the credit package can meet some 12 percent of the needed capital for one million social houses and homes for workers in the 2021-30 period.

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Vinh Tho - Bao Ngoc / Tuoi Tre News

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