External capital needed in struggle to resolve bad debts
External capital needed in struggle to resolve bad debts
A temporary source of capital outside Viet Nam's banking system is needed to resolve the rising problem of bad debts, according to experts.
At a seminar on restructuring banks and resolving bad debts which was held here last Tuesday, experts also said the current policies of the Viet Nam Asset Management Company (VAMC) were too restrictive to solve the problem.
Dr. Tran Du Lich, a member of the National Assembly's Economic Commission, said efforts to solve the problem have so far gained some ground but restrictions remain.
Lich noted that bad debts worth VND184 trillion (US$8.638 billion) have been paid since 2012, but economic difficulties have since given rise to more bad debts.
Figures from the State Bank of Viet Nam show that since its creation in July 2013 till August 20, 2014, the VAMC bought VND56 trillion ($2.63 billion) worth of bad debts from credit institutions but sold only VND1.4 trillion ($65.727 million) of these debts. The modest sales showed that the VAMC's policies and resources remain restricted.
Lich suggested that VAMC improve its financial status by either increasing its charter capital, using the Government's foreign loans or issuing bonds.
A capital source outside the banking system needs to temporarily pump funds into the system to resolve bad debts. The VAMC's VND500-billion ($23.474-million) charter capital is too modest to resolve the bad debts that have currently reached billions of dong, Lich added.
Nguyen Duc Thanh, director of the Centre for Economic and Policy Research, said the Government couldn't use the State budget to resolve bad debts as the budget deficit was large.
Thanh suggested that the Government use around VND100 trillion ($4.72 billion) earned from the sale of State-owned enterprises' assets to resolve the debts.
The Government should grant more rights to the VAMC and apply special policies on dealing with mortgaged assets to better resolve the problem.
Experts also urged the Government to withdraw capital from State-owned groups and corporations early so that the SBV could represent the State in holding the capital.
Petrolimex currently holds 40 per cent of PG Bank's charter capital while Electricity of Viet Nam holds 16 per cent of An Binh Bank, and PetroVietnam holds 52 per cent of PVcomBank's charter capital.
The restructuring of the banks can be implemented only when the SBV holds the capital, experts said.
The VAMC plans to buy bad debts worth US$5 billion by the end of this year, said General Director Nguyen Huu Thuy.
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