Government told to ease bond restrictions to revive property market

Mirae Asset Securities Company said credit has been tightened, capital mobilization through bonds is strictly controlled and loan interest rates are high, posing major challenges to the market.

It said loosening bond issuance regulations would help free up capital for businesses.

Economist Dinh The Hien said easing regulations would enable bond issuers, especially real estate businesses, banks and securities companies, to handle their existing problems and make cash flows smooth again.

Seized of the issue, the Ministry of Finance has recommended allowing enterprises to delay redemption by two years.

This year VND309 trillion (US$13.09 billion) worth of bonds are maturing, of which real estate companies account for VND119 trillion, according to data from the Vietnam Bond Market Association.

Firms also expect lending interest rates to remain steady this year, increasing by not more than 1 percentage point at most.

Many banks recently cut deposit interest rates by 0.3-1 percentage point, bringing down rates by 1-2 percentage points from last year to 8.7-9%.

Lower deposit interest rates and abundant liquidity will enable them to lower lending rates.

After a central bank meeting to discuss lending to the property market, Vietcombank said banks have agreed to cut their deposit interest rates and eventually lower credit interest rates.

Analysts said developing social housing is also a way to revive the stagnant property market.

The Ministry of Construction has called on lenders to earmark VND110 trillion, half each for home buyers and social housing developers.

The State Bank of Vietnam is considering another package for social housing. The four state-owned banks have already agreed to set aside VND120 trillion for lending to social housing developers and buyers at interest rates that are 1.5-2 percentage points lower than the market average.