Reallocating the funding for the interest rate support package to other initiatives

Many analysts proposed reallocating the funds for this program to other support programs such as tax reduction or exemption due to the poor distribution pace of the interest rate support package.

According to a State Bank of Vietnam report, the overall amount of disbursed interest rate support has only reached 330 billion dong, or around 0.83% of the total amount of the support package.

Disbursement delay

The low results of the interest rate support package are owing to a lack of willingness on the part of many enterprises to complete the time-consuming processes. Meanwhile, many banks are wary since numerous interest rate support funds from 2009 to the present have not been resolved. However, the post-inspection and appraisal of customers' "recovery capacity" is what businesses and banks are most worried about.

*According to VCCI's survey, 29.5% of businesses are aware of the interest rate support program, but only about 2% have received loans under the program*

Given this fact, the Government has asked the State Bank of Vietnam to submit a draft decree amending Decree No. 31/2022/ND-CP as soon as possible in order to eliminate barriers and promote the release of the interest rate support package.

Ms.Nguyen Thi Hong, Governor of the State Bank of Vietnam, recently responded to Binh Thuan voters, stating that the State Bank of Vietnam has a proposal to alter Decree No. 31/2022. However, the effects of interest rate support are still heavily influenced by customer psychology.

Transfer for effectiveness

The change to Decree No. 31/2022 will take time, and the expiry date for this support package is approaching, with a deadline of December 31, 2023 at the latest. Even if Decree No. 31 is changed, the psychological anxiety of businesses will not be eradicated.

After Decree No. 31/2022 is revised, the State Bank of Vietnam proposes to release just roughly 2,345 billion dong in interest rate assistance in 2023, leaving an estimated 37,521 billion dong unspent.

Associate Professor Dinh Trong Thinh, a financial specialist, believes that amending Decree No. 31/2022 will take a long time, while enterprises urgently want assistance to restore their production and profitability. As a result, the unallocated interest rate assistance money should be reallocated to other support packages such as tax reduction or exemption, business taxes and charges.

Furthermore, there is a proposal to redirect the resources of the interest rate assistance package to the development of social housing and worker housing. According to recently disclosed data, about 849,500 billion dong is required to meet the social housing construction objective of 1,062,200 social and workers' housing units by 2030, mostly through capital socialization.