Vietnam's PM calls for spending to propel growth

By Anh Vu, Thanh Nien News

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Just 23.5 percent of the funds allotted for spending on public projects had been disbursed during the first four months of this year. PHOTO: DIEP DUC MINH
Prime Minister Nguyen Tan Dung has asked ministries and provincial authorities to speed up site clearance and budget disbursement on infrastructure projects in an effort to boost the country’s economic growth.
Only 23.5 percent of the funds allotted for spending on public projects in the first four months of this year have been disbursed, Dung said at a monthly government meeting on Tuesday.
Identifying sluggish site clearance as the main reason for slow disbursements, Dung required local authorities, particularly in Hanoi, to mobilize residents to cooperate in the acceleration of site clearance work.
The Prime Minister reaffirmed that Vietnam’s economy is expected to expand by roughly 5.8 percent this year.
The country’s macroeconomic situation remains stable, he said, and consumer prices went up just 0.88 percent during the first four months of 2014, the slowest pace in the last four years.
With inflation expected to measure just 5-6 percent, this year, Dung asked the central bank to consider further interest rate cuts, soon.
“I’ve asked the central bank‘s governor to create favorable conditions for enterprises seeking bank loans. If these policies are delayed until the end of the year, they will not be of much significance,” the Prime Minister said.
Banks have cut lending rates by 0.5-2 percent so far this year.
Minister of Construction Trinh Dinh Dung told the meeting that conditions for obtaining preferential home loans should be eased to speed up disbursement of a VND30 trillion (US$1.43 billion) loan package.
He called for scrapping size restrictions and price per square meter restrictions on qualifying apartments. Instead, he suggested the value of the apartment should be capped at VND1.05 billion.
Currently, borrowers are offered loans at 6 percent interest for 10 years to buy apartments measuring less than 70 square meters and costing no more than VND15 million per square meter.
Low-income earners, government workers, and military personnel who do not own a home (or own a home that affords less than 8sqm to each household member) are eligible for the loans.
He also called for the payment terms for individual borrowers to be extended from 10 to 15 years.
Buyers of low-income housing who sign a purchasing contract before January 7 but have yet to complete their payments should be allowed to borrow, he suggested further.
He also expressed a desire for banks to be added to the small list of five institutions actively issuing loans at the moment.
In addition, he proposed that the government should not approve new commercial housing projects this year due an abundance of supply.
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