HCMC – The State Bank of Vietnam has asked the Vietnam Asset Management Company (VAMC) to come up with a plan to establish a debt exchange and submit it to the competent agencies for approval.
It is part of the VAMC’s tasks stated in the central bank’s decision on the development strategy of VAMC until 2025 with a vision toward 2030. The company was asked to complete the establishment and put the debt exchange into operation in the 2021-2025 period, the local media reported.
It must also build a debt and asset data center which will be connected with the National Credit Information Center and credit institutions.
To do so, it must take the initiative in seeking new partners and investors to sell bad debts and propose the establishment of an online auction platform to enhance the auction of assets at VAMC.
To increase VAMC’s financial capacity to fulfill these tasks, the central bank will propose the competent agencies provide capital for VAMC to increase its charter capital to VND10 trillion in the 2020-2021 period.
The early establishment of the debt exchange is expected to boost the settlement of bad debts at commercial banks and attract investors.
Commercial banks have repeatedly put up mortgaged assets for auction, including property products, factories, machines, vehicles, equipment, materials, vessels, shares and farms, to recover bad debts.
According to the deputy general director of a commercial bank, the debt exchange will make debt transactions more transparent and help banks settle bad debts faster.
Many local and foreign investors are keen on the debt trading market but remain hesitant in getting involved in bad debt transactions.
Dr Nguyen Quoc Anh from the Banking Faculty of the University of Economics HCMC said the debt exchange establishment is an indispensable trend amid the integration process. However, it is necessary to build a legal corridor for the debt trading market, facilitating the participation of many entities.
In other countries, debt exchanges attract not only private investors but also venture funds and enterprises. Vietnam should study some debt exchange models of foreign countries.
Meanwhile, Dr Dinh The Hien, an economic expert, said if all types of debts are put up on the exchange, it may be hard to attract investors. Therefore, debts with collateral of property products whose values and legality can be easily assessed should be introduced first.