Research on issuing government bonds to support social housing

The Prime Minister assigned the Ministry of Construction to study and propose a plan to issue government bonds and support interest rates for investment and construction of social housing.

The information is stated in the official dispatch that the Government Office has just sent to the Ministry of Construction, conveying the Prime Minister's opinion on solutions for developing social housing.

The government is implementing a project to build 1 million social housing apartments for low-income earners and industrial park workers by 2030. In the past three years, nearly 500 social housing projects have been implemented, providing over 411,250 apartments. However, less than 10% of the apartments have been completed, with the rest having just started construction or awaiting approval. Many businesses are facing difficulties as there are more procedures for social housing projects than for commercial housing projects.

Therefore, the Prime Minister requested the Ministry of Construction and other agencies to study the plan to issue government bonds to support the development of this housing segment. The Ministry also needs to study more solutions on interest rate support, investment and construction of social housing.

Government bonds - one of the popular financial instruments used by the Government to mobilize capital from investors. This is the first time the Government has mentioned this option for social housing development.

Previously, in the draft Decree on the development and management of social housing, which the Ministry of Construction consulted on at the end of February, the agency proposed the issuance of government bonds when developing this segment. This is to have resources for preferential loans for social housing development through the Social Policy Bank.

A social housing area in Thu Dau Mot City (Binh Duong Province), July 2023. Photo: Quynh Tran — A social housing area in Thu Dau Mot City (Binh Duong Province), July 2023. Photo: *Quynh Tran*

According to the report of the Ministry of Construction, the development of social housing in localities is uneven. For example, in Hanoi and Ho Chi Minh City, the number of apartments only meets less than 20% of the demand. Many places have not had any projects started in the past 3 years, such as Vinh Phuc, Ninh Binh, Nam Dinh, Quang Ngai.

Experts have recommended that the Government should prioritize budget allocation and resources to promote the development of the social housing segment. Currently, the Ministries of Planning & Investment, Finance and the State Bank are assigned to review and report to the Prime Minister on plans to supplement budget capital for lending to this sector through the Vietnam Bank for Social Policies until 2025.

At the conference on March 16, Prime Minister Pham Minh Chinh also assigned the Ministry of Finance to study the establishment of a social housing development fund. In addition to the VND120,000 billion credit package, the State Bank directed banks to study a credit package for social housing buyers, with a loan term of 10-15 years and preferential interest rates 3-5% lower than commercial loans. When implemented, these solutions are expected to help low-income workers and industrial park workers have the opportunity to buy houses.

Phuong Dung

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