The total bad debt of commercial banks has reached nearly VND308 trillion (US$14.6 billion), accounting for 9.71% of the total outstanding debt, deputy chief inspector of the State Bank of Viet Nam said; however, the figure had been revised to VND122 trillion ($5.58 billion), accounting for 3.86% of the total outstanding debt by the end of February after debt restructuring.
The National Financial Supervisory Commission (NFSC) had said earlier at a seminar that the bad debt was approximately 9% instead of the 15% assessed by the rating agency Moody’s.
Thanks to concerted efforts by the Viet Nam Asset Management Company (VAMC) and commercial banks, the former has so far bought around VND50 trillion (US$2.4 billion) worth of bad debts and plans to increase that to VND70-100 trillion by year-end.
It is only one part of the VAMC’s bad debt mitigation process. It next has to think of how to deal with the bad debts it buys.
The central bank wants VAMC to sell the bad debts to foreign investors, but its hands are somewhat tied, because of laws that prohibit foreigners from owning property in Viet Nam while most of the bad debts are related to property projects. How will foreigners buy the debts if they cannot get the title to the collateral?
Meanwhile, the Government has launched a VND30 trillion ($1.41 billion) loan package for home-buyers and property developers 10 months ago, and will release two credit packages at preferential interest rates to the fishing and coffee industries.
Accordingly, a VND10 trillion, or US$476.19 million, credit package will be set aside for fisheries at a preferential interest rate of 5% yearly.
The credit will allow businesses and fishermen to build new iron hull ships and upgrade old ships for offshore work, and to link the value chain from exploitation of resources, farming to processing, consumption.
A credit package of up to VND12 trillion, or $571.428 million, will be offered at preferential rates for replanting coffee trees in the Central Highlands.