The State Bank of Viet Nam (SBV) has expanded its credit growth target for commercial banks to create favourable loan conditions for businesses. Dr Su Ngoc Khuong, Senior Director of Investment at Savills Viet Nam, expects the new adjustments to support real estate recovery and development.
In the first half of 2022, the real estate market faced financial challenges in the form of tightened credit controls, corporate bond issuance regulations and a declining bond market.
On 07 September 2022, the SBV issued a notice adjusting the credit growth target in 2022 for selected commercial banks. Sacombank has expanded its credit limit by 4%, Agribank 3.5%, MB 3.2%, Vietcombank 2.7%, TPBank 1.2%, SHB 3.2%, OCB 3.1%, and VIB 3%.
New Opportunities for Businesses and Investors
According to Dr Khuong, by tightening credit controls, the government will be able to select and prioritise businesses and projects with good credit histories and cash flows, which will improve market health. The restrictions will also limit bad loans.
‘’The credit adjustments are positive for businesses and investors in real estate. The SBV’s latest credit adjustments will inject cash into the post-Covid economy, strengthening sectors and industries like services, production, and real estate, ‘’ Dr Khuong commented.
Viet Nam is one of the fastest growing countries in Southeast Asia and is increasingly popular with foreign investors. Since social distancing restrictions eased in Q4/2021, the economy has seen continuous increases, and tourism and hospitality have thrived with the rebound in domestic and international tourism. Industrial sectors have seen significant increases in signed deals since the borders fully reopened in March 2022.dr
.jpg "Dr Su Ngoc Khuong, Senior Director of Investments, Savills Viet Nam")
Dr Su Ngoc Khuong, Senior Director of Investments, Savills Viet Nam
’Viet Nam is an attractive market for foreign investors, given its strong pull factors. We expect healthy FDI inflows to continue. Given that Viet Nam has a population of nearly 100 million and large urban areas like HCMC, these investments are important,’’ Mr Khuong noted.
Although FDI decreased by -13% year-on-year, real estate received FDI of US$3.3 billion, accounting for 19.9% of the total registered investment capital.
Read: Strong FDI Inflows for High-Value Manufacturing Across Southeast Asia
M&A to Solve the Capital Problem
With the changes to credit regulations, many enterprises are seeking investment through M&A, especially unlisted companies.
‘’By linking multiple capital resources together, companies can improve their capacity, develop projects, and attract new customers, especially if they partner with foreign investors. For listed companies, much of their capital sits in stocks. Businesses with lower financial capabilities should restructure their investment operations and determine the legality of their projects.’’ Mr Khuong commented.
Read further: What is the Outlook for M&A in 2022?
Although challenged by new credit restrictions, complex legal procedures are still the number one headache for developers. The largest causes of delays and stagnation are legal issues, raising scepticism for domestic and foreign investors. The recent credit expansions will not be enough to make noticeable changes for businesses or improve supply levels. The only way to solve this issue will be to revise land policies, which will stimulate domestic and international investment.
Conclusion
Savills Viet Nam delivers comprehensive solutions and advice to occupiers, developers, and investors. Drawing from accurate and refined market knowledge, our Investment – Brokerage & Advisory Services cover a range of needs on all types of property.
If you are looking to jump into or expand in the Vietnamese market, contact Linh Tran Thi Khanh.
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