National asset manager reclaims skyscraper in HCMC to handle deep debt

Talking with media workers on the sidelines of the government’s meeting on socio-economic tasks in 2013, Governor Binh said the State Bank also applied its own measures to deal with bad debts. According to him, risk provision funds set up by credit organisations in 2012 are expected to reduce bad debts by VND40-50 trillion. In addition, relevant agencies are considering the establishment of a national asset management company, which if approved, can deal with another VND100 trillion in bad debts. The State Bank has submitted to the Government measures to deal with outstanding debts in capital construction, aiming to reduce the debt ratio by 30 percent each year until 2015, Binh said, adding that the central bank also plans to use other tools such as refinancing. Besides measures to handle bad debts, the State bank will use refinancing to supply more money for production activities, with priority given to agriculture and rural development, small- and medium-sized enterprises, supporting industry and hi-tech companies. Regarding other tasks next year, the central bank will continue efforts to restructure the banking system, while maintaining a stable foreign exchange rate and increasing the national foreign currency reserves. The National Assembly has approved the target of 5.5 percent economic growth rate for 2013, and to achieve this goal, a very large amount of capital will be required. Governor Binh said the central bank will try to ensure a credit growth of over 5 percent for each quarter and 5.5 percent for the whole year, adding that…... [read more]

Accordingly, the Government requested the State Bank of Vietnam (SBV) to manage credit growth in line with the plan set early this year while ensuring credit quality and assisting businesses to restructure old debts to increase credit access. The SBV was asked to intensify operational management of the banking system and closely monitor the implementation of safety ratio for banking activities. It is essential to implement a plan to restructure credit institutions for the period 2011 – 2015, enhance the role of the National Asset Management Company and speed up the settlement of bad debts in the banking system, the resolution said. The Ministry of Finance will direct budget collection activities to ensure the progress of revenue collection as planned, strictly control expenses and reinforce administrative reform and prevent acts of tax evasion, price rigging to protect consumer rights and ensure capital investment sourced from state budget and government bonds are used effectively. The Ministry of Planning and Investment will coordinate with ministries, sectors and localities to implementing solutions to accelerate disbursement of investment capital primarily from State budget, government bonds, ODA and FDI for key construction. The Ministry needs to provide enough capital for ODA projects and for those due for completion in 2014. The Ministry of Agriculture and Rural Development is tasked to coordinate with ministries, agencies and localities in managing agricultural structure in conformity with the market situation and production capacity to benefit farms. The Ministry should strengthen the examination and prevention of epidemics by closely monitoring…... [read more]

Everything is half-done Tu Hoang Although the Government has made many efforts to restructure the economy, all of them are still half-done, Vo Tri Thanh, vice president of the Central Institute for Economic Management, talked to The Saigon Times Daily. Excerpts: The Saigon Times Daily: In your opinion, what is the key point in the recent macroeconomic policies? - Vo Tri Thanh: Since Resolution 11 was introduced in 2011, policies have changed course, but the consistent goal remains macroeconomic stabilization. In addition, reform has kicked off. Such moves are prompted by the fact that the economy has become vulnerable due to structural shortcomings. First, the growth model mainly relies on credit and investment with high transaction costs and many distorted markets. Second, the macroeconomic foundation is insecure, with high inflation, wide fluctuations, large trade and budget deficits, rising public debt and small forex reserves… Now, macroeconomic polices are tightened. The economy in a good mood suddenly feels lost and displeased, but that is the cost of restructuring. What have been achieved regarding the goal of macroeconomic stabilization? - A couple of things have been achieved for the sake of macroeconomic stability. For example, inflation has fallen rapidly, currently at some 7% per year. Trade surplus has been obtained. Foreign reserves have markedly risen, although they are not yet large… However, the economy is still caught in the situation of abundant cash versus insufficient capital. This situation may continue in quite some time. Since the second quarter of 2012, Vietnam’s economy…... [read more]

Experts: Settling bad debt no easy task Ngoc Lan By Ngoc Lan - The Saigon Times Daily HANOI – Foreign financial experts have cast doubt on a quick fix for bad debt in Vietnam, saying the country lacks a clear mechanism for debt settlement. Darry Dong, a global financial market expert at International Finance Corporation (IFC), said Vietnam lacked a mechanism for foreign investors to get involved in settlements of bad debt. Few foreign investors pay attention to bad debt settlements here due to the unclear mechanism. Investors would buy debts here in the country if the mechanism was favorable, Dong told a seminar on debt settlements held by IFC in Hanoi on Tuesday and attended by debt settlement experts from many banks. P. Varangis, IFC global head for small and medium enterprises, said Vietnam has yet to reach a consensus on the national asset management company (AMC). He asked if it would be established by the State or through a public-private partnership. The scheme for AMC establishment was submitted to the Government on December 27 and will be passed this month. Time is an enemy of bad debt, said Dong. The longer bad debt settlement is delayed, the costlier it will be, said Sameer Goyal, the country coordinator for finance and private sector of the World Bank. According to international accounting standards, the bad debt ratio of Vietnam may be three times higher than the 8.6% announced by the central bank, said Goyal.... [read more]

Bad debt ratio at 4-5% by year-end: expert Hong Phuc By Hong Phuc - The Saigon Times Daily HCMC – The bad debt ratio of the banking system may fall to 4-5% under Vietnam’s accounting standards by the end of this year, said Le Xuan Nghia, former vice chairman of the National Financial Supervisory Commission. He forecast economic growth would be around 5.5% and inflation 7-8% this year. In addition, the exchange rate may rise 2-3% and short-term deposit rate may go down 1%, the expert said. He was speaking at a workshop called “Sharing investment opportunities in times of crisis” held by FLC Securities Joint Stock Company in HCMC last Saturday. Bank restructuring, with a focus on bad debt resolution and profitability restoration, is the most decisive stage of the economic restructuring process, he stated. The central bank has asked commercial banks to restructure part of their bad debt. The remaining part will be handled by the forthcoming national asset management company (AMC). “AMC will raise funds from issuance of a special bond guaranteed by the central bank. The company is directly managed and supervised by the central bank,” said Nghia, who is also a member of the National Advisory Council for Monetary Policy. During the process of bad debt settlement, small banks with high ratio of bad debt have to make risk provisions for financial assets. They might even be merged or taken over, which will affect the banking system and the stock market. Bad debt resolution can…... [read more]

Agriculture seeks to gain growth momentum The 560 thousand ha shrimp farming area in the Mekong delta is increasing its output. Deputy Minister of Agriculture and Rural Development Vu Van Tam stressed the need improve the quality of brine shrimps. "The tiger prawns can be sold in many markets, but white-leg shrimps face stronger competition. So we need to improve their quality and reduce prices. Exported shrimps should be free from antibiotics, residues, and banned chemicals. Efforts should be made boost trade promotion and expand the markets," he said. Vegetables and fruits have also posted high growth of 37%. Experts say cultivation areas and crops should be expanded and product quality, safety and hygiene should be ensured. Major products, including dragon fruits, mangoes, durians, longans, rambutans, litchis, and bananas need more attention. Ho Xuan Hung, President of the General Assembly of Vietnam Agriculture and Rural Development, said, "It's important to review crop selection. We need to adapt to climate change. Salt water intrusion is caused by unfavourable weather and by humans." "If there are reliable forecasts, we will restructure farming production. The agricultural sector needs to focus on aquaculture and cultivation of vegetables and fruits in addition to developing the forest-based economy," he added. The agricultural sector's longer-term measures include administrative reform, investment attraction, market expansion, and food safety assurance. Vietnam M&A forum to be held in Ho Chi Minh City The Vietnam Merger & Acquisition (M&A) Forum 2016, the eighth of its kind, will take place in Ho Chi…... [read more]

An audit conducted last year into the 2014 performance of state-run Vietnamese companies and banks has found the country’s bad debt continuing to rise while little change is forced upon lenders found gaming the system. An audit conducted last year into the 2014 performance of state-run Vietnamese companies and banks has found the country’s bad debt continuing to rise while little change is forced upon lenders found gaming the system. By the end of 2014, the nonperforming loans of state-run banks in Vietnam totaled VND145.2 trillion (US$6.48 billion), up 24.6 percent from 2013, according to a report the State Audit of Vietnam submitted to the lawmaking National Assembly this week. The bad debt in 2014 accounted for 3.25 percent of the banks’ total outstanding loans, down 0.36 percent from 2013. The State Bank of Vietnam said their 2014 bad debt ratio was 4.83 percent. The Vietnam Development Bank posted a bad debt ratio of 11 percent in 2014, up a massive 68 percent from a year earlier, state auditors noted. The State Audit of Vietnam commented that the state-run banks failed at managing their nonperforming loans and most lenders were still relying on selling bad debts to the Vietnam Asset Management Co. (VAMC), the national asset management firm. The VAMC was founded in 2013 to buy nonperforming loans from banks in an effort to revive an economy choked with bad debts. In 2014, state-run banks sold a total of VND79.61 trillion ($3.55 billion) of their VND143.5 trillion in bad debts…... [read more]

GOVERNMENT ————— No. 29 / NQ – CP SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom – Happiness ——————– Ha Noi, May 2, 2014 RESOLUTION The Government’s regular meeting – April 2014 Pursuant to the Law on Organization of the Government dated December 25, 2001; Pursuant to the Government’s Decree 08/2012/ND-CP, dated February 16, 2012 promulgating the Working regulation of the Government; Based on the discussions among the Cabinet’s members and the conclusion of the Prime Minister at the Government’s regular meeting held in April 2014, RESOLVES: 1. Regarding the reports on socio-economic performance in April and the first four months of 2014; the implementation of the Resolution No. 01/NQ-CP dated on January 2, 2014 by Government pertaining key tasks and solutions for guiding the realization of the socio-economic development plan and State budget estimate in 2014; The Government unanimously agreed that the first four months of 2014 saw many positive macro-economic signs; inflation was put under control, State budget collection increased fairly against that preset; April CPI slightly increased against March but record low over the last four years; interest rates continued to be decreased, credit structure witnessed positive changes in some preferential fields; liquidity of the commercial banks was improved; foreign exchange rate and market maintained stability, foreign currency reserve surged. Export maintained high growth momentum; import of raw materials for production and business rose. Agricultural, forestry and aquatic production continued to be relatively stable. Industrial production was on the rise. Service sector witnessed fairly good results. Foreign direct…... [read more]

VietNamNet Bridge - Economists all have affirmed that Vietnam would witness a strong foreign capital inflow this year. However, it is unclear if the investors come to Vietnam to implement their long term business strategies, or just to seek temporary shelter. Malaysian Maybank Kim Eng (MBKE), said during his working visit to Vietnam some days ago that he got surprised about the high growth of the Vietnam's stock market in 2013 and the first months of 2014. Meanwhile, the senior executive, in his first visit to Vietnam two years ago, told the investors that this was not the right time for them to invest in Vietnamese stocks once the conditions were not favorable enough. MBKE cited the figures to show the high growth rate of the market. In 2013, the value of the foreign investment portfolios increased by $3.3 billion to $12 billion. The capitalization value of ETFs increased by 24.3 percent to $375.8 million in the same year, and had reached $479.8 million by the end of February 2014. Answering the questions of the local press on the sideline of a recent workshop, the expert from MBKE said he believes Vietnam would be able to better attract foreign capital than the other regional countries this year. Three reasons have been cited to explain the forecast: the cheap Vietnamese stocks, the improved macro economy and the information about Vietnam's move to offer higher foreign ownership ratios in Vietnamese businesses. The government's efforts to restructure the national economy in 2011 and…... [read more]

The non performing loan (NPL) ratio in the local banking system is not as high as the 15 percent rate recently reported by US-based credit rating agency Moody's, said the State Bank of Vietnam (SBV) on Saturday. The SBV's announcement came three days after Moody's published a report on Vietnamese banking system outlook for 2014. The agency said in the report that it estimated the real bad debt ratio in the Vietnamese banking system to be at least 15% of total outstanding loans, much higher than the 4.7% rate the central bank recorded as of October 2013. The data compiled by other international credit rating agencies also assessed that NPLs in the Vietnamese baking system should be much higher than the official figures the SBV announced, including Fitch, which also estimated the rate to be 15%, according to the report. However, according to data reported by local credit institutions, the NPL ratio of the banking system of Vietnam increased from 4.08% by the end of 2012 to 4.73% of total outstanding loans as of October 2013, said SBV. "As the macroeconomic situation gradually improved, coupled with the efforts of the local banking system, there have been many positive signs contributing to the tackling of the bad debts." "By the end of December 2013, the NPL ratio of the whole system has significantly been reduced to 3.63% of total outstanding loans. This is the central bank's official bad debt figure which is determined based on the provisions of the current legislation…... [read more]

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