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VNRE - The Ministry of Construction has submitted several proposals to the State Bank of Viet Nam that aim at creating favourable conditions for the domestic real estate market.

In its petition, the ministry said the credit-tightening policy had seriously affected the domestic real estate market, and many projects had not been developed because of capital shortage.

The ministry said the SBV needed to adjust monetary policies in ways that could enable the domestic real estate project to develop.

It suggested that the central bank adjust the proportion of loans appropriate to each industry's legitimate needs.

In particular, the central bank should reduce the number of loans in construction of urban areas, offices for lease, building and preparing houses for sale, buying land-use rights or land clearance, and new projects.

Lending priorities should be given to individuals who are buying houses, and construction of infrastructure that will be used for production and trading activities, such as workshops.

Loans also should be given to projects involved in the construction of trade centres and markets, the building or repairing of houses; and to unfinished projects.

More than 200 industries and branches have been affected by the real estate credit squeeze, according to Vo Quoc Thang, chairman of the Viet Nam Young Entrepreneur Association.

Most enterprises involved in industries such as steel, cement, bricks, tiles, grass and wood had had to cut their production due to a lack of construction projects, Thang said.

Many factories had reduced their production activities and some even had had to close because they could not sell their products as many construction projects had not been active, he said.

Construction industry insiders also revealed that many contractors, particularly small ones, together with their workers fell into unemployment since a series of construction projects had to come to a halt because of a shortage of capital.

Do Duy Thai, general director of the Thep Viet Joint Stock Company (Pomina), said several steel enterprises were working less as their sales had dropped by 50 per cent compared with the same period last year.

At Pomina company, each worker was working only for 10 days a month, Thai said.

He said that the central bank's credit tightening policy for non-manufacturing sectors was necessary in a time of high inflation.

However, the bank should not reduce credit to the whole real estate sector because many enterprises in this area also created products.

The credit squeeze had caused a major impact on many industries, Thai added.

Projects that work on buildings for low and medium-income earners should not be subject to the credit tightening policy because they serve people's housing demand, according to Nguyen Quoc Duy, deputy general director of the Hoa Binh Real Estate Trading and Construction Joint Stock Company.

Thai of Pomina agreed, saying that authorised agencies should soon have measures to help the real estate sector settle current difficulties.

He said specific criteria should be developed to clearly identify unproductive and productive real estate projects.

He also affirmed the need to reduce credit for new real estate projects and land clearance projects.

For projects under development, Thai said the central bank should have a more open mechanism to reduce the number of inoperative projects, which were causing great waste and influencing other industries.

Cao Si Kiem, chairman of the Small – and Medium-sized Enterprises Association, agreed with the construction ministry's proposals to separate real estate investors and speculators to ensure that credit is dispensed properly.

Source: VNA

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