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Chinese andVietnam learns China’s experience in dealing with bad debts Vietnamese economists gathered in Hanoi on December 17 to share experience in managing and dealing with bad debts.

At the workshop, an expert from the Financial Research Institute under the Chinese Ministry of Finance said China’s bad debts have risen from the Chinese State-owned commercial banks, accounting for one-third of their total bank loans since the 1990s. Other reasons include slow progress in building mechanisms for State banks to improve their management skills and the Government’s interference in the structuring of financial resources in the private business sector.

She said the Assets Management Company (AMC) is an important tool to deal with bad debts of the Central Bank of China. Since 1999, AMC has tried to handle bad debt outstanding on a large scale.

Since 2008, many local businesses have hit snags in their operations due to the impact of the global economic downturn, owing bad debts to credit organisations.

Pham Manh Thuong, Vice Director of the Debts and Assets Trading Company (DATC), said by the end of June last year, all credit organisations’ bad debts stayed at VND188,961 billion, accounting for 7.12% of total credit outstanding. Of the figure, bad debts related to real estates made up a large proportion.

Thuong said most bad debts were caused by a decline in economic growth and consumer demand. Many businesses were unable to pay off their debts. One subjective reason was that most credit organisations were more focused on stimulating growth than controlling the quality of credits. Some even invested in risky areas, such as real estate and securities to incur bad debts when they were frozen.

(VOV)

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