Establishment of debt purchase-and-sale companies was an effectiveway to manage bad debts, a conference in Hanoi was told on September19.
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'stotal bad debts was 202 trillion VND (9.6 billion USD), accounting for8.6 percent of total outstanding credit, while the National FinancialSupervision Committee calculated the figure at 11.8 percent, equivalentto 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 andPolicies, the debt rate showed an increasing trend to nearlydouble-digit level, though it was lower than other countries in theregion.
The rate in the Republic of Korea was 17 percent;Thailand, 47.7 percent; Malaysia, 11.4 percent; and Indonesia, 50percent.
Private debt purchase companies would be more flexible in management than State-owned ones.
If a company was under bank management, debt restructuring would beeasier 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 extremelyimportant 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, thedebt-purchase companies would buy the debts and mortgage assets frombanks 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 thecredit institution system by 2015 with the aim of settling bad debts by2015.
Since 2007, Vietnam has a Debt and AssetTrading Corporation (DATC), which operates under the Finance Ministry tosettle bad debts.
Conference participants raisedquestions on whether the establishment of debt purchase-and-salecompanies 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'stotal bad debts was 202 trillion VND (9.6 billion USD), accounting for8.6 percent of total outstanding credit, while the National FinancialSupervision Committee calculated the figure at 11.8 percent, equivalentto 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 andPolicies, the debt rate showed an increasing trend to nearlydouble-digit level, though it was lower than other countries in theregion.
The rate in the Republic of Korea was 17 percent;Thailand, 47.7 percent; Malaysia, 11.4 percent; and Indonesia, 50percent.
Private debt purchase companies would be more flexible in management than State-owned ones.
If a company was under bank management, debt restructuring would beeasier 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 extremelyimportant 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, thedebt-purchase companies would buy the debts and mortgage assets frombanks 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 thecredit institution system by 2015 with the aim of settling bad debts by2015.
Since 2007, Vietnam has a Debt and AssetTrading Corporation (DATC), which operates under the Finance Ministry tosettle bad debts.
Conference participants raisedquestions on whether the establishment of debt purchase-and-salecompanies could be effective while DATC existed.-VNA
