Recently, there was a stir in public opinion from the real estate community about there shall be 50 or 120 trillion VND package to support the real estate market. There are many opinions that this is a virtual supportive package. However, Mr. Le Xuan Nghia, PhD – Former Vice Chairman of the National Financial Supervisory Commission said that the figure of 50 or 100 trillion VND is still too little, in the coming time, there shall be bigger programs.


Mr. Le Xuan Nghia


How do you think about the effectiveness of the – “4 parties chain” model?


In my opinion, the “4 parties chain” model is a combination of supplying capital and construction materials that is widely deployed for urban projects and new urban areas. Thereby, in many cases recently that after finishing the construction, the contractor does not have money to pay to the material suppliers, laborers, leading to the fact that 3 Parties: investor, contractor, supplier are in debt at banks and the risk of bad debt is very high, this model can help to solve the problem.


It is said that the 50 trillion VND supportive package is virtual, how do you think about this?


The 50 trillion VND package is a mixed package designed by Construction Bank. This package associates the benefits of the partners (commercial banks – construction material suppliers – investors and house buyers). However, may people say that this is a virtual supportive package but I don’t think so. Because before offering the credit figure, the Construction Bank has calculated on the basis of the total credit for the construction industry. And according to this estimate, the total credit for the construction industry at the present time is about 700 – 800 trillion VND, so the figure of 50 – 100 trillion VND is still too little, in the coming time, there shall be bigger programs.


Do you believe that the 50 trillion VND credit package will be effective?


In my opinion, the current real estate market is still in difficulty, so the effectiveness of the 50 trillion VND package shall not be as desired from the beginning. But at least, the effective projects in progress shall be fast deployed since the capital is supplied. For the real estate businesses with bad debt, but their projects are good, the bank shall localize the bad dept and continue lending to complete the projects. At the same time, if the businesses participate in this package, the interest rate shall be “softer” and the capital turnover shall be more effective...


When the projects are completed, do you have any worry that the real estate inventory shall rapidly increase?


It is said that real the estate inventory would be increased, in my opinion, the inventory would not be in the urban areas but it would be in the area far away from the City and didn’t have good infrastructure, it couldn’t be sold even though it didn’t face any difficulty. Wrong investment in a normal market might kill investors. For projects near urban areas with good infrastructure, since they were completed, they could be sold well.

At the same time, the 50 trillion VND credit package shall allow people to borrow money for repairing, constructing, expanding the houses, supplying construction materials with the best price.


Can the 50 trillion VND credit package recover the real estate market as expectation?


It takes time for the real estate market to recover, but the immediate benefit of this package is to solve the backlog buildings, to complete the pending projects due to the poor financial management. At the same time, this credit package will have a good impact on the real estate and construction materials market because the construction materials are congested due to large supply source, while the demand is still weak.


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