Although the Minister of Planning and Investment affirmed to “not use budget capital to buy bad debts of banks,” many National Assembly deputies wondered where does VND100 trillion ($5 billion) come from to buy bad debts, at the proposal of the central bank.
Minister of Planning and Investment Bui Quang Vinh.
At the Q&A session on the afternoon of June 13, deputy Chu Son Ha of Hanoi asked: Will a company be set up to purchase bad debts of banks, with VND100 trillion of capital? Where does the capital come from? Will it affect the government’s goal on curbing inflation?
Deputy Tran Thi Quoc Khanh of Hanoi questioned Minister of Planning and Investment Bui Quang Vinh: the comprehensive plan on restructuring the economy, connecting with changing the growth model, said that the state budget may have to pay part of the cost to deal with bad debts of commercial banks, please tell us what is the ground for that proposal? What is your responsibility for raising that suggestion?
Deputy Khanh added: “While commercial banks earn great profit; the income of their officials and employees is many times higher than the average; people and businesses cannot borrow capital from banks but you still plan to use the people’s inconsiderable money to pay bad debts for commercial banks. How many roads and schools will not be built because the state budget has to pay bad debts for these banks?”
“Are these bad debts related to the rescue of Vinashin (state-owned Vietnam Shipbuilding Industry Group) or is there any official who acts as guarantee for those bad debts?” she continued.
Minister Vinh confirmed that his ministry does not participate in bad debt purchasing projects. This issue is under the competence of the State Bank of Vietnam’s governor.
Vinh said that the principle is not buying bad debts by state budget capital but bad debts are now a ‘clotted blood piece’ that hinders Vietnamese businesses from borrowing capital from commercial banks, even though interest rates have been cut. He said that experts had suggested considering using state capital to partly solve bad debts, especially when bad debts owned by stat-owned enterprises are huge.
Meanwhile, Governor Nguyen Van Binh of the central bank stated that debt purchasing is normal and legal.
He said credit institutions set up debt trading firms. Debt trading is proved to be effective in many countries during economic crisis. The Finance Ministry has had its debt trading company.
Binh added that the establishment of a national debt trading firm was the suggestion of experts at a recent meeting with Prime Minister Nguyen Tan Dung. The PM instructed the central bank to develop a national debt trading plan.
According to Binh, the central bank has completed the draft plan, which will be submitted to the government for consideration. If it is approved, the state bank will make public the plan and ask for the National Assembly’s approval, if it is necessary.
Vice Chair of the National Assembly’s Committee for Economics Nguyen Duc Kien told VietNamNet’s correspondent on the sideline of the NA session that the matter is not establishing and won’t establish a national debt trading firm. The world has a good precedence on this operation. The US Federal Reserve System (FED) used to purchase bad debts of banks and then sold it to earn profit.
However, the central bank is the management agency of the state so it cannot directly buy bad debts.
To set up a debt trading firm with up to $5 billion capital, the central bank would have to make clear and convincing explanation. What is the difference between this company with the debt trading firm that is managed by the Finance Ministry? While the chartered capital of this firm is up to $5 billion while that of the Finance Ministry’s company is only VND30 trillion ($1.5 billion)? How are the operation regulations of this firm? How will be it supervised to prevent the influence of interest groups?
Only when these questions are answered convincingly, the plan to establish the national debt trading company can be implemented, Kien said.
|< Prev||Next >|
» Japan honours Vietnam’s former investment minister
» Seminar discusses Japanese business difficulties in Vietnam
» Denmark does not cut ODA grant yet, Minister
Latest Category Posts
- Tributes paid to Nelson Mandela
- Vietnam, GMS countries look to common goals
- PM Dung greets Thai, Indian ambassadors
- Deputy PM Minh lays floral tribute to Nelson Mandela
- Freedom of speech, press strengthened in Vietnam
- Exchanging money for profit to be prohibited
- Vietnam-Uruguay diplomatic ties celebrated
- 500 kV power line to link northwestern provinces
- Government issues monthly resolution
- HCM City reaches most of 2013 targets
Random Category Picks
Popular Category Posts
- Super typhoon makes landfall in central Vietnam
- Newborn baby ineligibly named board chairman
- HCM City to inspect 25 state-owned firms
- Are dog thieves to blame for fatal vigilante attacks?
- General Vo Nguyen Giap's funeral in Quang Binh
- Foreigners praise General Vo Nguyen Giap
- Vietnam mourns General Vo Nguyen Giap
- Japanese teacher’s body kept in hospital in HCMC
- Finance ministry’s salary cut proposal faces government opposition
- City families shifted for embankment works
- Vietnam to restructure agriculture and profit farmers: Minister
- General Vo Nguyen Giap to rest in peace on Quang Binh’s island
- In pictures: People pay tribute to General Giap outside funeral home
- Central Vietnam devastated after storm Wutip
- Facebook page of General Vo Nguyen Giap launched by his family
- U.S. reporter cries when talking about General Vo Nguyen Giap
- Hospitals pulled up on violation charges
- The first images of Vietnam’s 90 millionth citizen
- Fake doctors a big problem in HCM City
- Bodies of two workers swept away in hydropower plant's tunnel found