200 industries affected amid credit crunch

June 29, 2011 | 18:01

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Up to 200 realty-related industries , both in production and service, have been badly affected as banks are tightening lending for the real estate sector to meet the government’s requirement in limiting non-production loans.

building

In early March, the State Bank of Vietnam (SBV) ordered that commercial banks have to gradually reduce loans to non-manufacturing sectors (mainly real estate, personal consumer and securities) to 22 per cent of the total outstanding loans by 30 June to curb inflation.

Since then, many construction projects have halted.

Do Duy Thai, CEO of Thep Viet Corporation (Pomina), said the tightening credit policy has caused difficulties to certain production sectors related to real estate.

Taking the steel industry as an example, Thai said that many steel manufacturers have been forced to cut production as the total consumption has fallen by 50 per cent year-on-year.

He said his workers in Pomina now had to work only 10 days a month due to lack of contracts.

A number of real estate projects have been suspended and have stopped ordering steel, he explained.

Vo Quoc Thang, chairman of Dong Tam Long An Corporation, said the tightening policy is spreading negative impacts on as many as 200 industries.

Those included manufacturers in the fields of glasses, cements, bricks and wood.
“Many factories have to cut production, or even shut down, and a lot of workers have lost their job,” he said.

For a solution, Thai proposed the central bank only restrict credit for newly-launched projects, or projects related to site clearance and infrastructure construction.

As for construction projects that have been underway, he said the central bank should loosen its policy to enable these to continue so that related industries will not be affected and workers saved from unemployment.