Solutions to revive the Vietnam real estate market

Dr. Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association

>> New law on real estate tax under consideration

The State Bank of Vietnam hosted a conference on February 8, 2023, with firms and their relevant associations to discuss ways to improve credit in the real estate market. Dr. Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association, spoke with Business Forum Magazine about the expected effects on the market.

- What is your opinion about the positive steps taken by the Government to address the challenges in the real estate market?"

The government's aggressive actions in late 2022 and early 2023 were crucial in strengthening public confidence in the real estate market's revival in Vietnam.

The real estate industry is poised to stabilize if the government addresses the underlying obstacles it is now facing, such as legal difficulties, capital constraints, and poor confidence levels.

- A number of meetings were held at the end of 2022 to develop plans for overcoming the difficulties the Vietnamese real estate sector was experiencing. To lessen the effect on the market, the government formed a special task force. What are the present effects, according to your association's observations?

The specific effects have not yet been determined. However, the government's actions have generated optimism in the market, and companies are eagerly anticipating the adoption of new legislation.

The government task force is having difficulty addressing contradictions in macro rules, policies, and laws despite their best efforts.

A review of these laws and policies is being conducted to address these problems with the goal of making the required adjustments. However, this process is a lengthy undertaking that needs a lot of planning and coordination. In order to address any inconsistencies or unreasonable restrictions, the working group is now analyzing the difficulties and formulating proposals.

The Vietnam Real Estate Association and the business community both have faith in the government's good initiatives and are looking forward to the disclosure of new solutions, which is anticipated in February.

- We have analyzed the challenges faced by the real estate market at the end of the past year. As we move toward the upcoming meeting aimed at finding solutions, what specific objectives do you believe the government has set forth?

The meeting's main objective is to discuss the credit issue in the real estate market. In order to keep the inflation rate and exchange rate stable in 2022, the government tightened monetary policy and increased interest rates. Currently, the global environment and many macro issues make it difficult to cut interest rates.

There may yet be a need for additional tightening measures even if we are presently enacting steps to protect the economy. However, in order to revive economic development activities and meet the requirements of the majority of the population, it is also essential to pump capital into the economy.

>> Imperative to revive cash flow in current market

Credit will be allocated more selectively, with a strong emphasis on certain goals. The development of social housing, affordable housing for low-income families, and rental housing will be prioritized. Investors that take part in these initiatives will receive loans with more favorable terms and reduced interest rates.

There will still be access to loans for other types of housing, such as commercial or luxury housing and housing for business investments, but at higher interest rates.

The real estate industry is poised to stabilize if the government addresses the underlying obstacles it is now facing

Another objective is to deal with bond issuance. The government adopted Decree 65/2022 dated September 2022 to amend and supplement some articles of Decree 153/2020 on the sale and trading of privately placed corporate bonds on domestic and international markets.

The high level of professionalism required by Decree 65/2022 has not yet been realized by businesses, investors, and bond issuers. So, bond issuing operations have decreased as a result.

As a result, the proposed revision to Decree 65/2022 needs to have a clear plan and provide investors with enough time to make the necessary preparations and lay the necessary groundwork for compliance with the requirements. This will make it easier for firms to issue bonds in accordance with the law.

- Will the government's comprehensive efforts resolve the challenges faced by the real estate market and generate new optimism in the industry?

The present laws and policies are being put in place to revive the real estate market, much like the real estate crisis of 2013.

These regulations are designed to address the difficulties that local governments and enterprises encounter when carrying out projects and launching products.

A good signal has been conveyed, and action has been taken by the appropriate agencies as a result of the government's resolute steps. The State Bank has already started talking to groups and enterprises about loan alternatives, showing how committed the government is to carrying out its orders.

Market participants and corporations are both excited about how these measures will turn out.

Thank you for your time!