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Debt may reach VND 30 trillion in 2008
The debt of local credit institutions may reach VND 30 trillion (US $1.9 billion) this year, according to Le Xuan Nghia, Director of the Banking Development Strategy Department under the State Bank of Vietnam (SBV).
Nghia released the figure at a workshop held on October 28, discussing the global financial crisis and actions of Vietnam’s banks and enterprises.
He said that a large proportion of the debts come from real estate credit, while the remaining volume comes from business loans.
The forecast VND 30 trillion in debts was released after the consideration of reports made by credit institutions. The figure had reached VND 22 trillion (US $1.4 billion) by the end of September 2008.
The figures released by the SBV at the end of July about the percentage of businesses paying debts on schedule show that: 23% of businesses have been profitable, 73.2% of businesses have been operating at the average level, and 3.8% of businesses have been facing difficulties, of which 1.42% of businesses may lose capital.
The period between the end of 2007 and the beginning of 2008 witnessed a booming of the real estate market, with a large sum of capital that was flown into the sector at that time. As prices in real estate have decreased by 30-40% and the real estate market has become frozen, enterprises cannot recover money from investment projects to pay the banks.
Nghia said that the settlement of the debts is still possible, provided that the two sides, businesses and banks, cooperate closely with each other to find the right solutions.
Nghia said that the biggest problem now is that businesses and banks still cannot sit together to exchange information.
What is noteworthy is that debts gather in some banks only. Therefore, if no proper solution can be found, some banks will fall into large difficulties by the end of the year.
VNN
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