Property developers seek further access to bank loans

Speaking at a meeting with government officials Thursday, Dang Minh Truong, chairman of theme park operator and property developer Sungroup, said developers needed access to loans with lower interest rates.

"Interest rates should be lowered even further to speed up recovery," he said.

Average loan interest rate is now at 6.4% a year for new loans, down 0.7 percentage points from last year, according to the State Bank of Vietnam.

Loans that had occurred in previous years, however, still have high floating interest rates.

Quang Van Viet Cuong, deputy CEO of industrial property developer Becamex, said that acquiring licenses was the biggest knot for companies and if they couldattain all permits accessing credit would be much easier.

Vietnam’s property sector started to see difficulties in mid-2022 when loan interests rose amid the violations of some developers in bond issuance.

Challenges still linger as companies are having trouble paying debts and redeeming bonds.

Companies in the manufacturing sector also want a reduction in interest rates.

Le Tien Truong, chairman of garment firm Vinatex, said that since the end of last year banks have been cutting their credit for textile companies or requiring large collateral.

"Last year banks required collateral to be at 20% of loans, but now they want 100%," he said.

There is less incentive policy for the sector in Vietnam compared to other competing countries, he said, adding that incentives in electricity pricing, logistics expenses and labor cost were lower than in China and Bangladesh.

"Without support from the banks and directions from the government, we might see the textile industry disappear," he said.

By February-end, credit issuance in the economy fell 0.72% from the beginning of the year.

The drop narrowed down from a 1.12% decline in January.

Deputy Governor of the State bank Dao Minh Tu that businesses were reluctant to make new loans in the beginning of the year, and some scaled down or shut down due to rising inflation and input costs and a lack of orders.