Establishment of debt purchase-and-sale companies was an effective way to manage bad debts, a conference in Hanoi was told on September 19.
Handling bad debts associated with corporate finance restructuring was an urgent problem, the conference heard.
There was no exact figure on bad debts.
However, the State Bank of Vietnam (SBV) figures showed the country's total bad debts was 202 trillion VND (9.6 billion USD), accounting for 8.6 percent of total outstanding credit, while the National Financial Supervision Committee calculated the figure at 11.8 percent, equivalent to 207 trillion VND(9.85 billion USD).
For Fitch Ratings calculation, the bad debt rate was at 13 percent.
Accordingly the Finance Ministry's Institute for Finance Strategy and Policies, the debt rate showed an increasing trend to nearly double-digit level, though it was lower than other countries in the region.
The rate in the Republic of Korea was 17 percent; Thailand, 47.7 percent; Malaysia, 11.4 percent; and Indonesia, 50 percent.
Private debt purchase companies would be more flexible in management than State-owned ones.
If a company was under bank management, debt restructuring would be easier as the bank would have the customer's debt documents, participants said.
But they pointed out a bank could use the companies to hide their bad debts.
Economist Ngo Tri Long said evaluation of debts was extremely important and would ensure benefits for both buyers and sellers.
He said debt should be settled by a combination of debt purchase-and-sale companies, banks and businesses.
As bad debts in Vietnam often were related to mortgages, the debt-purchase companies would buy the debts and mortgage assets from banks at a value that avoided risks.
Bad debts in Vietnam had been often settled by auction or sale to other credit institutions or debt purchase companies.
Meanwhile, the Prime Minister has approved a restructuring of the credit institution system by 2015 with the aim of settling bad debts by 2015.
Since 2007, Vietnam has a Debt and Asset Trading Corporation (DATC), which operates under the Finance Ministry to settle bad debts.
Conference participants raised questions on whether the establishment of debt purchase-and-sale companies could be effective while DATC existed.-VNA
Handling bad debts associated with corporate finance restructuring was an urgent problem, the conference heard.
There was no exact figure on bad debts.
However, the State Bank of Vietnam (SBV) figures showed the country's total bad debts was 202 trillion VND (9.6 billion USD), accounting for 8.6 percent of total outstanding credit, while the National Financial Supervision Committee calculated the figure at 11.8 percent, equivalent to 207 trillion VND(9.85 billion USD).
For Fitch Ratings calculation, the bad debt rate was at 13 percent.
Accordingly the Finance Ministry's Institute for Finance Strategy and Policies, the debt rate showed an increasing trend to nearly double-digit level, though it was lower than other countries in the region.
The rate in the Republic of Korea was 17 percent; Thailand, 47.7 percent; Malaysia, 11.4 percent; and Indonesia, 50 percent.
Private debt purchase companies would be more flexible in management than State-owned ones.
If a company was under bank management, debt restructuring would be easier as the bank would have the customer's debt documents, participants said.
But they pointed out a bank could use the companies to hide their bad debts.
Economist Ngo Tri Long said evaluation of debts was extremely important and would ensure benefits for both buyers and sellers.
He said debt should be settled by a combination of debt purchase-and-sale companies, banks and businesses.
As bad debts in Vietnam often were related to mortgages, the debt-purchase companies would buy the debts and mortgage assets from banks at a value that avoided risks.
Bad debts in Vietnam had been often settled by auction or sale to other credit institutions or debt purchase companies.
Meanwhile, the Prime Minister has approved a restructuring of the credit institution system by 2015 with the aim of settling bad debts by 2015.
Since 2007, Vietnam has a Debt and Asset Trading Corporation (DATC), which operates under the Finance Ministry to settle bad debts.
Conference participants raised questions on whether the establishment of debt purchase-and-sale companies could be effective while DATC existed.-VNA
