Blog

30th June 2026

Toward a viable rental housing market

Policymakers and industry leaders discuss what is needed for affordable rental housing to facilitate Vietnam’s next stage of urban and real estate development.

We recognize that Vietnam’s property market has traditionally favored homes for sale over rental housing.

First, this stems from the deeply-rooted Vietnamese culture of homeownership. The concept of “settling down before building a career” remains deeply ingrained, with many people believing that wherever they work, they should eventually buy a home, establish a family, and educate their children there. Renting is often associated with instability, lack of success, or an inability to provide for future generations.

Dr. Doan Van Binh, Vice Chairman of the Vietnam National Real Estate Association and Chairman of the CEO Group

As a result, Vietnam’s homeownership rate is among the highest in the world. According to Kentucky-based real estate company Garret, Vietnam ranks third globally with a homeownership rate of 90 per cent, behind only Romania and China. Meanwhile, data from Global Property Guide places Vietnam 13th globally, also with a homeownership rate of 90 per cent.

This mindset has also contributed to the rapid rise in housing prices. Figures show that Vietnamese property prices increased by approximately 59 per cent over the past five years, higher than in the US (54 per cent), Australia (49 per cent), Japan (41 per cent), and Singapore (37 per cent), according to VietnamPlus. Rental yields in Vietnam range from 2-4 per cent annually, depending on location; significantly lower than the 5-7 per cent typically seen in many regional markets.

Vietnam’s house price-to-income ratio is also extremely high, ranging from 23.7 to 30-times annual income. In other words, households would need to save the equivalent of 23-30 years of total income, without spending anything, to purchase an average home. This is roughly 1.6 to 2-times higher than the global average of 11 to 15-times, while the generally accepted affordable threshold is 5 to 7-times.

Second, Vietnam’s long-term capital market remains underdeveloped, including the market for Real Estate Investment Trusts (REITs).

Third, development costs, regulatory compliance costs, and borrowing costs remain high.

Fourth, the institutional framework has largely favored housing-for-sale development. The State derives significant revenues from land-use fees, while developers prefer projects for sale because they can access financing more easily, mobilize capital before project completion, recover investment more quickly, and face shorter-term obligations, which are generally fulfilled upon handover of homes to buyers and transfer of technical infrastructure to the authorities.

However, Vietnam’s socio-economic landscape is changing rapidly. Urbanization continues to accelerate, urban populations are expanding, and labor mobility is increasing at an unprecedented pace. At the same time, housing prices remain high and continue to rise, placing homeownership beyond the reach of many young people, workers, professionals, scientists, and middle-income households. This poses growing challenges for social welfare and housing accessibility.

As representatives of the real estate business community, we strongly support the government’s efforts and hope it will establish appropriate mechanisms to encourage private sector participation in the development of rental housing and affordable housing in line with the Party and government’s policy directions.

Specifically, the State should play a facilitating role through institutional reforms, planning, land allocation, and credit policies, based on the principle of neither providing blanket subsidies nor leaving the market entirely to self-regulate.

The role of businesses is to participate in developing rental housing with reasonable profit expectations while ensuring professional management and operations.

* * *

Over the past several years, the government has submitted a range of mechanisms and policies to the National Assembly (NA) aimed at removing bottlenecks in the land sector in general and the housing and real estate market in particular. The NA has issued Resolution No. 254 and the government has adopted Resolution No. 49, both of which contain important measures to unlock resources for the market.

Mr. Vu Sy Kien, Deputy Director of the Department of Land Administration at the Ministry of Agriculture and Environment

First, regarding land resources for housing development, local authorities have been given greater autonomy to review, identify, and allocate suitable land for different housing types based on local demand and development needs.

Second, with respect to stalled projects, a number of mechanisms have been introduced to address obstacles related to compensation and site clearance. In practice, many projects have completed more than 70 per cent of compensation work but have been unable to move forward due to procedural difficulties. The introduction of these measures has enabled many real estate projects to resume implementation, helping increase market supply.

Third, on land pricing policy, the previous requirement to determine land values on a project-by-project basis created significant challenges for investors in managing timelines, cash flow, and investment costs, while also resulting in large disparities between projects. New regulations now allow the application of land price tables combined with land price adjustment coefficients in certain cases, helping simplify procedures, improve transparency, and create a more predictable investment environment. For social housing projects, exemptions from land-use fees remain an important policy tool to reduce development costs and support growth in this segment.

We view rental housing as a particularly important segment. At this stage, developing rental housing should be regarded as a priority, a key pillar and a major growth driver for the future direction of Vietnam’s housing and real estate market.

In my view, one of the biggest challenges today is that we have not yet fully identified the role, scale and actual demand for rental housing within the broader housing market. Therefore, it is important to conduct a comprehensive nationwide assessment of rental housing demand as soon as possible. This would provide the basis for local authorities to allocate land, prepare planning frameworks, and introduce appropriate policies to support the sustainable development of the sector.

There are two areas where pilot rental housing programs could be prioritized. The first is in city centers and Transit-Oriented Development (TOD) areas, where large numbers of young professionals, skilled workers, and experts are concentrated. Land for such projects could be supported through preferential policies, including reduced or zero land-use fees, to attract private investment.

The second is rental housing in industrial parks, targeted at workers on modest incomes. This segment has significant potential to improve living conditions for workers while supporting workforce stability and economic development.

* * *

First and foremost, rental housing is an essential segment in the current context. However, from a legal perspective, the regulatory framework governing this segment remains incomplete.

Associate Professor Nguyen Quang Tuyen, Dean of the Faculty of Economic Law at Hanoi Law University and Arbitrator at the Vietnam International Arbitration Centre (VIAC)

The National Assembly has adopted several relevant resolutions, but a key issue remains: how rental housing should be formally defined within the legal system. Without a clear legal definition, it will be difficult to design appropriate policies and management mechanisms. At present, the Law on Housing 2023 contains a dedicated chapter on social housing, but there is no comprehensive and separate framework governing rental housing. This legal gap should be addressed as soon as possible.

Therefore, during the planned amendments to the Land Law 2024, the Law on Housing 2023, and the Law on Real Estate Business 2023 this year, I believe it is necessary to introduce at least one dedicated chapter or a specific set of provisions governing rental housing. This would help complete the legal framework and create a foundation for the systematic and sustainable development of the sector.

In addition to general provisions on land access, there should be stronger incentive mechanisms that make it easier for businesses to access land and develop rental housing projects.

Another important issue is planning. The government should clearly assign responsibility to local authorities for preparing land reserves specifically designated for rental housing. At the same time, legislation should specify the proportion, location, and allocation criteria for such land reserves to ensure transparency and consistency in implementation. This is a matter of particular concern to the business community.

It is also necessary to clarify mechanisms for exemptions and reductions of land rental fees, as well as the State’s responsibility in facilitating land access for developers of rental housing projects. Only when input costs are kept at reasonable levels can rental prices remain affordable for tenants, thereby supporting the sustainable development of the sector.

A key question is whether the current Land Law clearly defines the responsibilities of local authorities in land clearance and site preparation to create clean land funds for rental housing development.

In practice, existing regulations remain relatively general and do not clearly distinguish or specify these mechanisms.

In addition, it remains unclear what specific incentives exist regarding land-use rights and obligations for rental housing developers compared with other forms of real estate development. This is widely regarded as one of the major implementation bottlenecks.

For tenants, greater legal clarity is also needed regarding their rights and protections, including occupancy rights, lease terms, administrative procedures and dispute-resolution mechanisms. Currently, these matters are largely governed by general regulations rather than provisions tailored to the specific nature of rental housing.

In my view, these issues should be studied carefully and incorporated into the law through a more comprehensive and coherent framework. Only then will businesses have the confidence to invest, and only then can the rental housing market develop in a truly sustainable manner.

* * *

Ibelieve rental housing is often treated as a special segment, but in reality it is not fundamentally different from what already exists in the market. Today, rental activity spans the entire housing spectrum, from luxury apartments and commercial housing to studio units and informal rental properties along the Red River. Rental housing is already an integral part of Vietnam’s real estate market.

Dr. Ngo Trung Hai, Vice Chairman of the Vietnam Urban Planning and Development Association

Any market is ultimately driven by supply and demand. There must be landlords willing to rent out properties and tenants willing to lease them. Therefore, an important question is whether Vietnam truly needs a separate legal framework dedicated solely to rental housing.

In my view, the more important issue is how urban space is organized and how appropriate development mechanisms are designed. In China, for example, authorities have introduced the R4 land-use category, which is specifically designated for long-term rental housing developed and operated by private investors. Modern urban planning also no longer draws rigid distinctions between commercial housing, social housing, and rental housing. Instead, the focus is on ensuring that all urban residents have equal access to quality housing services. A well-integrated mix of housing types can help create more livable and inclusive cities.

Transit-Oriented Development (TOD) linked to metro systems presents a particularly significant opportunity for commercial housing, social housing, and rental housing alike. In practice, demand for rental housing around TOD hubs is substantial. Along the Ben Thanh - Suoi Tien Metro Line in Ho Chi Minh City, for example, many students and lower-income residents rely on the system and represent a strong potential tenant base.

However, relatively few developers remain genuinely interested in rental housing projects. This raises an important question: to what extent should the State intervene?

Japan’s experience offers useful lessons. There, developers are given considerable autonomy in TOD projects while being encouraged to allocate a certain proportion of development to rental housing, social housing, and commercial housing.

I believe developers can successfully invest in rental housing and generate reasonable returns, much as has been done in China. Such an approach would help gradually build a more stable, sustainable and self-regulating real estate market, rather than one that alternates between periods of excessive expansion and abrupt slowdowns.

I am not pessimistic about Vietnam’s real estate market. However, we should be mindful of the risk of creating cities that lack vibrancy; places where housing units are sold but remain largely unoccupied, leaving neighborhoods dark and inactive at night.

For *that reason, the most important question is determining the appropriate balance between rental housing and other housing segments. This is an issue that both policymakers and developers must carefully assess based on the specific characteristics and needs of each city.

* * *

In the past, homeownership was widely viewed as a prerequisite for stability and career success. Today, however, the labor market has changed significantly. Previous generations often spent their entire careers with one employer, making homeownership central to “settling down.” Younger generations are more mobile, frequently changing jobs and locations to pursue new opportunities.

Professor Hoang Van Cuong, Vice Chairman of the State Council for Professorship and Vice Chairman of the Vietnam Economic Association

As a result, being tied to a home purchased years earlier can be less practical than renting, which offers greater flexibility. Rental housing allows people to live closer to work, move between neighborhoods, and adjust their housing arrangements as their needs evolve. Young couples and financially-independent single adults are increasingly choosing to live separately from their parents before they have accumulated enough savings to buy a home.

Renting also helps avoid the burden of long-term mortgage debt. Many homeowners spend decades repaying housing loans, limiting their ability to invest in other aspects of their lives. Consequently, demand for rental housing is rising rapidly, particularly in major cities, making it an increasingly important component of urban development.

Given these realities, Vietnam needs a comprehensive strategy for developing the rental housing market. If rental housing is to become a sustainable segment, it will require both public and private sector participation.

If the State acts alone, resources will be insufficient and long-term operation and maintenance may be difficult to sustain. Conversely, if the market is left entirely to private investors under current conditions, rental housing cannot effectively compete with housing developed for sale. Development costs are high, while rental income is often insufficient to cover financing costs, let alone recover the initial investment. This makes State leadership particularly important.

The government should play a central role in urban planning by allocating land for rental housing in areas close to city centers, with good transportation links but lower commercial value.

Classical urban development theories suggest that the most commercially-valuable central areas should be reserved for business and service activities, while nearby areas with lower commercial value are better suited to high-density residential developments that meet rental housing demand.

This approach aligns with the evolution of mature real estate markets. During periods of rapid expansion, developers tend to build homes for sale because capital can be recovered quickly. As markets mature and land becomes scarcer, investment increasingly shifts toward generating long-term income from existing assets, creating natural conditions for a larger rental housing market.

For this reason, rental housing policies should initially focus on major urban centers where demand is strongest. Suitable land should be allocated in locations supported by quality infrastructure, public services, and convenient transportation.

Land costs are another critical issue. Land-use fees often account for a significant portion of development costs, particularly in central urban areas. To reduce financing burdens, land-use payments for rental housing should shift from large upfront payments for permanent residential land rights to annual land rental payments.

For the rental housing market to develop effectively, coordinated reforms are needed across legal, land-use and investment policies. The goal should be to create rental communities that offer quality living environments, comprehensive amenities, and genuine long-term value, rather than serving merely as temporary accommodation for those unable to purchase homes.

If Vietnam can implement a coordinated strategy, rental housing can become a major and sustainable pillar of the country’s real estate market in the years ahead.

* * *

Following the administrative merger, the new Ho Chi Minh City is home not only to nearly 3 million migrants already residing in the city but also to more than 1.2 million migrant workers from former Binh Duong province. As many as 974,000 people are estimated to need social housing through purchase, lease, or lease-to-own schemes. However, during the 2021-2025 period, only 17,902 social housing units were completed.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association

The social housing development target for 2026-2030 is 181,498 units. Even if the city succeeds in delivering 199,400 social housing apartments by 2030, supply will still fall short of the housing needs of workers and low-income urban residents, particularly in the rental segment.

To encourage greater private sector participation in the development of affordable rental housing, the Association proposes incorporating a dedicated policy framework for “rental housing affordable to middle and low-income urban residents” into the amended Law on Housing and related legislation.

This framework should include exemptions from land-use fees and land rental payments for land acquired by developers through negotiated transfers for affordable rental housing projects. These incentives should apply throughout the entire life cycle of the project.

Affordable rental housing projects and social rental housing projects typically require at least 20 years to recover investment costs. Therefore, projects should be required to maintain rental operations for a minimum of 20 years in order to qualify for preferential policies. Such a requirement would align incentives with the long-term nature of these developments and ensure consistency throughout the project’s life cycle.

The Association proposes reinstating the policy of reducing value-added tax and corporate income tax rates by 70 per cent for developers of social rental housing projects and affordable rental housing developments. Relevant tax legislation should also be amended to further reduce development costs and rental prices.

In addition, the Association recommends that the State regulate only the maximum rental rate for affordable rental housing projects, similar to the existing framework for social housing rentals. Developers should retain the right to determine tenant eligibility for affordable rental units within their projects.

The Association further proposes amending the Law on Housing and related regulations to establish minimum standards for studio apartments and rental units, with a minimum floor area of no less than 15 sq m. This would facilitate the development of small rental apartments that are better suited to single-person households, two-person households, and changing demographic trends.

Source: en.vneconomy.vn

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31st July 2026

Few countries have carried out reforms on the scale of Vietnam in recent years, while the Southeast Asian nation’s economy has shown impressive growth and resilience in the face of external shocks, an International Monetary Fund (IMF) official said on Tuesday.

Jochen Schmittmann, the outgoing regional resident representative for the IMF Resident Offices in Vietnam, Cambodia, and Laos, made the remarks during a meeting with Vietnamese Prime Minister Le Minh Hung in Hanoi.

Also attending the meeting was Fazurin Jamaludin, who will assume the position of IMF representative for Vietnam and Laos from August 23.

The Vietnamese premier thanked Schmittmann for his contributions during his tenure, particularly his efforts to maintain policy dialogue and connect programs on training, institution-building, and capacity development.

He said the Party Central Committee's recent third plenum adopted a resolution on renewing Vietnam's development model, recognizing that the country is at a historic turning point that calls for deep and large-scale reforms.

The structural reforms are aimed at laying the foundation for long-term development and helping Vietnam achieve its two strategic 100-year goals: becoming a developing country with modern industry and upper-middle income status by 2030, and a developed, high-income country by 2045.

PM Hung said the government remains committed to pursuing economic growth while maintaining macroeconomic stability.

He underscored that Vietnam will ensure the safety of its financial and banking system, strengthen fiscal discipline, and develop capital markets to reduce its reliance on bank credit.

The country will not sacrifice macroeconomic stability or the safety of its financial and banking system for rapid but unsustainable growth, he added.

The prime minister also spoke about the upcoming National Assembly session, which is expected to consider and pass a series of bills to further improve Vietnam's legal and institutional framework in line with international standards and practices.

The move will help make the investment and business environment safer and more attractive while strengthening the confidence of businesses, investors, and international partners, he said.

PM Hung described the IMF as a strategic policy advisory partner and a trusted companion in Vietnam's socioeconomic development.

The government values the IMF's assessments and recommendations and considers them an important source of information for policymaking and implementation, he said.

PM Hung expressed hope that during Jamaludin's tenure, the IMF office would continue to serve as an important and proactive bridge, maintain regular policy dialogue, and offer practical advice to support Vietnam's goal of rapid and sustainable growth.

Echoing the prime minister's sentiments, Schmittmann spoke highly of the strong cooperation between Vietnam and the IMF, praising the country's impressive economic growth, effective response to external shocks, and significant reforms.

Few countries have been able to carry out reforms on the scale Vietnam has in recent years, he said.

He also lauded Vietnam's key development priorities, particularly its efforts to make breakthroughs in science and technology, innovation, and digital transformation.

Vietnam still has room to further accelerate growth, particularly by ensuring effective coordination between fiscal and monetary policies and other policy measures, Schmittmann said.

He offered several specific recommendations and affirmed the IMF's full support for Vietnam's goal of achieving double-digit economic growth, as well as its efforts in the financial, monetary, and banking sectors.

For his part, Jamaludin noted that Vietnam is entering a new phase of development with promising prospects and expressed his impression of the country's ambition to achieve double-digit growth.

He said he hoped to build on the positive results of cooperation between the IMF and Vietnam during his tenure.

The IMF stands ready to remain a trusted partner and work with and support Vietnam in realizing its development goals and priorities in the coming period, Jamaludin said.

Resolution 10: Turning ESG commitments into action for quality FDI

31st July 2026

VOV.VN - Moving beyond mere GDP growth, global capital now demands Environmental, Social, and Governance (ESG) standards for high-quality FDI in Vietnam. Yet, a clear gap persists between the country's ESG commitments and its actual implementation.

Current state of ESG implementation

ESG serves as a set of criteria evaluating corporate sustainability across three pillars: Environmental, Social, and Governance. No longer a mere compliance requirement, ESG has become an essential benchmark for investors assessing risk and allocating capital.

According to PwC’s 2025 survey on ESG progress in Vietnam, roughly 89% of surveyed enterprises have established or plan to establish ESG commitments within the next two to four years; 61% have formulated structured ESG strategies; and 41% have integrated ESG into their core business models. This indicates a marked shift in corporate awareness regarding sustainable development, moving from short-term growth mindsets toward long-term orientation. ESG is gradually becoming a central component of governance and investment strategy.

However, experts note that the proportion of businesses truly embedding ESG into core operations, governance, and long-term strategy remains low.

Dr. Tran Van Khai, Vice Chairman of the National Assembly’s Committee on Science, Technology and Environment, points out that Vietnamese enterprises face numerous hurdles in implementing ESG.

"ESG remains a new field in Vietnam. Although adoption has accelerated in recent years, the country still lacks a unified nationwide guidance framework and criteria. Financial constraints, technological limitations, and a shortage of high-quality human resources pose major barriers to corporate ESG practice," Khai says.

For small and medium-sized enterprises (SMEs), practicing ESG presents an obstacle and is often seen as a compliance cost rather than a strategic investment, while short-term profit pressures leave many hesitant to allocate resources for transformation.

In addition, Vietnam’s legal framework and supporting ecosystem for ESG are not yet fully developed, while fragmented guidelines and oversight mechanisms make it difficult for businesses to adopt ESG systematically, effectively, and in line with international standards.

Dr. Nguyen The Binh, Director of the Banking Science and Technology Research Institute at Banking University of Ho Chi Minh City, points out a wide divide between making ESG commitments and actually putting them into practice.

"About 60% of businesses report a lack of expertise due to numerous unapplied guidelines and frameworks; 46% cite enterprise size as an obstacle; and 28% indicate a lack of transparent information. Measuring and evaluating ESG performance in Vietnam is also difficult due to the absence of unified assessment tools and standardized criteria. Balancing environmental, social, and governance factors is a tough challenge, as ESG demands a comprehensive transformation of core internal elements, from corporate culture and strategic thinking to actual operations," Binh stresses.

Refining institutions to turn ESG into competitive edge

With international investors sharply focused on sustainable development and risk transparency, ESG has become an entry ticket for capital allocation.

Dr. Le Xuan Nghia, Director of the Center for Development Consultation (CODE), emphasizes that Vietnamese businesses have no choice but to pursue green growth and meet ESG criteria.

"Vietnamese enterprises rely almost entirely on commercial bank credit without alternative funding sources. Although global green capital and energy transition funds are abundant, domestic firms face very limited access. In an environment where investment capital grows increasingly cautious and international requirements become stricter, ESG is no longer a superficial bonus to polish profiles, but a mandatory condition to enter global supply chains and access long-term, low-cost capital," Nghia states.

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Resolution No.10 on foreign investment development sets the goal of positioning Vietnam as a competitive destination for high-quality, medium- and long-term foreign capital. Translating the resolution into concrete policies that support and invest in effective ESG practice is key to making Vietnamese firms attractive to foreign investors.

Dr. Tran Van Khai outlined three immediate priorities to ensure genuine ESG adoption:

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Vietnam holds significant advantages in attracting international capital, but funds will flow to the most trusted destinations rather than the fastest-growing ones. Genuine and effective ESG adoption serves as the "pass" for both the economy and domestic enterprises to enhance competitiveness and draw high-quality FDI. Achieving this requires supportive state policies to help businesses narrow the gap between commitments and sustainable ESG practice.

SBV faces tough monetary management amid high capital demands

30th July 2026

The disparity between credit growth and deposit growth is creating a fierce underlying deposit raising race among commercial banks.

HÀ NỘI — While the capital market is underdeveloped, the banking system is burdened with the responsibility of supplying capital beyond its actual capacity, causing a fierce deposit raising competition and putting heavy pressure on the State Bank of Vietnam (SBV)’s monetary policy management.

Việt Nam’s economic development strategy for the 2026-2030 period sets an ambitious GDP growth target of 10 per cent or more per year.

According to detailed calculations from BIDV Research, to achieve this goal, the required average investment capital will be around US$250-260 billion per year. Looking further ahead to 2045, the economy's capital needs could reach $500 billion per year.

However, the Vietnamese economy still relies heavily on bank credit, with this channel consistently accounting for 50-60 per cent of the total capital supply.

Meanwhile, long-term capital channels such as the corporate bond market only account for a modest 3-6 per cent, and the stock market contributes about 10-18 per cent.

Phạm Xuân Hòe, former deputy director of the Institute of Banking Strategy, said that banks are simultaneously burdened with three heavy responsibilities: acting as payment intermediaries, providing short-term capital and financing medium- and long-term capital.

The consequence of this situation is that the balance sheets of the banking system are constantly overloaded, he noted.

Currently, about 80 per cent of deposits in Việt Nam have maturities of less than 12 months, while medium- and long-term loans once accounted for up to 47 per cent of total outstanding loans.

According to SBV data, as of June 15, credit growth reached 6.35 per cent, but deposit growth only reached 4.3 per cent. This 2 per cent gap forces banks to attract deposits in a variety of ways.

The disparity between credit and deposit growth is creating a fierce race to raise deposits among commercial banks. Meanwhile, depositors are easily misled by the varying interest rates offered.

While the listed interest rate on banks’ websites for a six-month term is only around 6 per cent per year, customers can actually receive 9-10 per cent per year through special conditions related to balances or certificates of deposit.

At one private bank, customers depositing VNĐ200 million or more are offered an interest rate of 8.5 per cent per year. Some even offered 9 per cent for deposits of VNĐ1 billion or more.

Chairman of Vietcombank’s board of directors Nguyễn Thanh Tùng pointed out the obstacles related to the imbalance of capital sources. According to Vietcombank's calculations, to achieve 10 per cent GDP growth, the investment rate needs to reach 40 per cent of GDP, but the average domestic savings rate is currently only 36.5 per cent.

If the growth of unofficial sectors is excluded, the accumulated domestic capital deficit is even more severe.

Tùng confirmed that his bank always adheres to directives on interest rate levels, so raised capital is currently insufficient to meet growth needs.

Although Vietcombank's loan-to-deposit ratio is below 70 per cent, a safe level compared to the SBV's 80 per cent ceiling, the bank still warned that there will not be enough capital for large projects in the future.

Tùng proposed raising capital from external sources by allowing the Ministry of Finance to issue international bonds to leverage national prestige and obtain the best possible interest rates.

He also expressed a desire for the capital market, especially the corporate bond market, to develop more rapidly.

The current size of Việt Nam's corporate bond market is only equivalent to about 10 per cent of GDP, significantly lower than other countries in the region such as Thailand and Malaysia.

SBV Governor Phạm Đức Ấn admitted that pressure to raise capital is making the central bank’s interest rate management difficult.

When capital demand is high but raised capital is limited, rising deposit interest rates will cause higher lending interest rates, directly impacting enterprises. To alleviate this pressure, the SBV is working to prevent commercial banks from engaging in extreme competition for capital mobilisation.

As for long-term solutions, the governor said the SBV is studying expanding the scope of eligible foreign currency loans serving investment purposes, especially for import businesses.

In addition, the amended Law on Credit Institutions allows commercial banks to manage collateral assets for businesses issuing bonds. This is expected to be a breakthrough, because many investors are currently hesitant about the collateral assets of corporate bonds, such as real estate, or assets formed from borrowed capital.

Only when banks participate in this asset management process can the bond market develop enough to alleviate the burden of medium- and long-term capital requirements in the banking system.

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