Vietnam lawmakers debate ways to reinvigorate economy

HA NOI (VNS)–Questions about how to provide businesses with access to loans, settle bad debts, manage the gold market and ensure dam safety fueled a heated question and answer session yesterday between National Assembly deputies and Government officials.

Answering a question about the gap between world and domestic gold prices, State Bank of Viet Nam governor Nguyen Van Binh said that when the domestic gold price went up, the government in the past had to import gold to stabilize the market, which could negatively affect foreign currency reserves.

He said the government had produced circular 95 earlier this year to solve this problem by imposing heavy penalties on illegal and fraudulent traders.

"The government does not trade gold bars and it does not encourage the trade of gold bars. That is why the price gap between the world and domestic prices does not have any impact on the macro-economy," Binh said. "So there is no reason for the government to interfere by stabilizing the gold market any longer."

Replying to a question about how to mobilize gold from domestic sources such as citizens, Binh said that domestic individual gold reserves are estimated to reach some 400 billion tonnes.

"If banks could buy some 300 billion tonnes of gold from individuals, we could mobilize as much as $3 billion for the economy," he said.

When Nguyen Van Tuyet from Ba Ria Vung Tau asked why the SBV does not manage the quality of gold but instead manages the gold trademark, Binh responded that this flaw would be soon be relegated to the past: "Circular 24 will standardize the quality of gold. The reason why we currently use SJC as the gold standard is because SJC gold bars now account for 90 per cent of the market."

As for how to deal with bad debts, which accounted for 8.82 per cent of total debts, Binh said some progress had been made.

About VND 252 trillion ($12 billion) worth of debt had been relocated, out of VND 2700 trillion ($128 billion) of total outstanding debt - equivalent to 8-9 per cent.

Meanwhile, financial organizations have increased their risk management assistance fund value to VND 75 trillion ($3.6 billion), Binh said, and he would require them to add even more to the fund when needed.

In response to questions on how to help businesses get access to loans, Binh said the government in July had reduced the interest rate from 15 to 9 per cent.

Meanwhile, the outstanding loans bearing the old interest rate of 15 per cent had been reduced from 60 - 70 per cent to 20 per cent.

While businesses complained that it was not easy for them to get access to loans, Binh said banks and business should "find each other," as these institutions depend on one another to survive.

He added that he would ask banks to issue more preferential policies to encourage businesses to get access to loans, which would help them overcome their current economic difficulties.

Dam safety

In response to NA deputies' questions about dam safety, Minister of Construction Trinh Dinh Dung said the reservoir of quake-hit Tranh River Hydroelectricity Plant 2 in Quang Nam Province will stay empty until scientists have confirmed that the dam is safe.

Human safety was the top concern and priority of the Government, he said.

As part of the examination, international geologists from Russia, India and Japan would be invited to help evaluate the earthquake situation in the area.

Dung was responding to a question on the dam's safety from Deputy Ngo Van Minh, of central Quang Nam Province.

Minh had asked why the reservoir was left empty this year after an official announcement that the dam was technically safe and could deal with an earthquake magnitude of up to 5.5 on the Richter Scale.

"The decision had made local residents confused and worried," Minh said.

He called for a clear statement from the leader of the ministry directly in charge of construction quality.

In response, Construction Minister Dung said: "At present, the dam is safe enough for residents in surrounding areas to stay put."

So far, many earthquake and tremors had been recorded at the hydropower plant but their strength were less than magnitude 5.5 as estimated by the Institute of Geophysics.

Another hot issue in the Q&A session was the alleged misuse of more than VND10.6 trillion (US$509.6 million) by Song Da Group, a State-owned corporation under the ministry's management, which was uncovered last year by the Government Inspectorate.

Chief of Government Inspectors Huynh Phong Tranh yesterday said the group's violations were mainly related to capital management, lack of reserve fund and delay in paying tax.

Tranh said the ministry and the group were being constructive in fixing the violations but detailed responsibility of individuals or organizations had yet to be determined.

Responding to a question about bad debts in other State-owned construction groups, received from Deputy Le Nhu Tien, of central Quang Tri Province, Dung said many enterprises in the sector were facing difficulties, as were enterprises in other sectors.

The ministry was reviewing the bad debt situation and seeking solutions, which could include restructuring enterprises, developing key products and improving staff management. — VNS

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