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Property sector calls for rethink on bank loans

The new restriction on banks of using only 40 per cent of their short-term deposits for long and medium-term loans should not take effect next year, the HCM City Real Estate Association has said.

In a document to the Government and the State Bank of Viet Nam, HoREA said: “It is not necessary, it is not practical and does not meet the requirements of developing the real-estate market.”

The rate should remain at 45 per cent, it suggested.

HoREA mentioned in its documents circulars issued by State Bank of Viet Nam including circular 36/2014/TT-NHNN, 19/2017/TT-NHNN, in which the maximum level that banks can use to give long and mid-term loan was 60 per cent in 2016 and 50 per cent in 2017. It will then drop to 40 per cent by January 2019.

The association said the law requires property developers to have own capital of 15-20 per cent of the project cost and can borrow the rest.

But banks are unable to meet that demand since short-term deposits account for a large proportion of their total deposits, the association said.

The second reason the association wanted the new regulation to be delayed was the sharp decline in the property market in the first nine months of the year as credit to the sector fell to the lowest level in three years.

But next year the market would rebound, driven by the mid-priced segment, the association said.

The industrial property market would also grow strongly since many foreign investors are choosing Viet Nam to move into, it said.

This would also boost the office and hired apartment segments, it added.