Deputy Prime Minister Hoang Trung Hai has asked commercial banks to act fast and remove impediments to disbursement of the 30 trillion VND (1.5 billion USD) housing stimulus package introduced by the government.

The package aims to encourage development and purchase of social housing projects, giving a growth impetus to the stagnant real estate sector.

At a recent meeting organised by the Central Steering Committee on Housing Policy and the Real Estate Market, Hai said social housing development projects that have been signed before July 1 must be allowed to borrow from the package.

The 30 trillion VND (nearly 1.5 billion USD) package to shore up the real estate sector was announced mid-May.

The package offers property developers loans with low interest rates of around 6 percent per year. The central bank also asked commercial banks to provide loans to low-income earners who want to rent or buy houses.
Representatives of social housing projects and localities said at the meeting that the government's recent measures to support the real estate market particularly the 30 trillion VND stimulus package, have not been brought into full play because of obstacles in the banking sector.

For their part, the banks admitted disbursement of the 30 trillion VND stimulus package is slow, but added they are being cautious in their lending to avoid a worsening of the bad debt problem.

A Vietinbank representative said that his bank has so far signed credit agreements worth 20.3 billion VND (1 million USD) with 66 customers.

Meanwhile, Vietcombank has lent 11.7 billion VND (510,000 USD) to 50 property buyers, but has signed no credit contract with project owners.

A BIDV representative said that the bank has signed 23 credit agreements but has not disbursed funds contracts because legal criteria to identify who are low-income earners have not been finalised yet.

Nguyen Dong Tien, deputy governor of the State Bank of Vietnam , said disbursement of the stimulus package is sluggish because supply of social housing is still limited and procedures for mortgaging assets are rather complicated.

Nguyen Ngoc Thanh, chairman of the Vietnam Real Estate Association, said that some banks have refused customers saying they do not have guidelines for lending (under the package) from their head offices.

"The 30 trillion VND housing stimulus package is a very sound policy of the Government, but highly complicated procedures prevent people who are in real need of housing from getting loans," Thanh said.

Tien of the central bank said the bank would set up a working group to oversee implementation of the package and ensure its effectiveness.-VNA