Apartment blocks in Ha Noi's Gia Lam District. Commercial banks are urged to act fast to remove hindrances to the disbursement of the VND30 trillion housing stimulus package. — VNA/VNS Photo Tuan Anh

HCM CITY (VNS)— Deputy Prime Minister Hoang Trung Hai has asked commercial banks to act fast and remove impediments to disbursement of the VND30 trillion (US$1.5 billion) 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 meeting organised by the Central Steering Committee on Housing Policy and the Real Estate Market last Friday, Hai said social housing development projects that had been signed before July 1 must be allowed to borrow from the package.

The VND30 trillion (nearly US$1.5 billion) 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 per cent 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 VND30 trillion stimulus package, had not been brought into full play because of obstacles in the banking sector.

For their part, the banks admitted disbursement of the VND30 trillion stimulus package was slow, but added they were being cautious in their lending to avoid a worsening of the bad debt problem.

A Vietinbank representative said that his bank had so far signed credit agreements worth VND20.3 billion ($1 million) with 66 customers.

Meanwhile, Vietcombank has lent VND11.7 billion ($510,000) to 50 property buyers, but had signed no credit contract with project owners.

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

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

Nguyen Ngoc Thanh, chairman of the Viet Nam Real Estate Association, said that some banks had refused to entertain interested customers saying did not have guidelines for lending (under the package) from their head offices.

"The VND30 trillion 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.

Hai said all stakeholders should seek ways to overcome problems encountered in the process of implementing policies and regulations so as to facilitate lending and borrowing.

Tien of the central bank responded that the central bank would consider implementation of the housing stimulus package as its key task in the remaining months of the year.

It would set up a working group to oversee implementation of the package and ensure its effectiveness, he said. — VNS