The Ministry of Finance’s headquarters in Hanoi (Photo: mof.gov.vn) Hanoi (VNS/VNA) - The functions and operations of the VietnamDebt and Asset Trading Corporation (DATC) should be restructured to dealwith the “next phase” of handling non-performing loans (NPLs), the FinanceMinistry (MoF) said.
Explaining a new decree that it has drafted, the ministry said in the 13 yearssince it was established, the DATC has fulfilled its mandate and created asolid foundation for tackling NPLs across the country.
Since its establishment in 2004, the DATC has actively worked to resolve NPLs,purchasing debts of about 80 trillion VND (3.56 billion USD), of which 2.8billion USD worth of bad debts was disposed of via “a designated mechanism,”while loans worth 762.7 million USD were settled directly in the market.
The DATC handled the debt and assets of 2,628 State-owned enterprises (SOEs),with the total book value of liabilities and assets estimated at 195.8 millionUSD, thereby contributing to improving the enterprises’ financial situation andaccelerating the SOE equitisation process.
It has significantly helped improve the economy’s overall bad debt situation,affirming its efficacy as a tool for the Government in handling bad debts andpromoting business restructuring across various economic sectors, the MoF said.
However, the DATC has also encountered many difficulties and obstaclesincluding the lack of a breakthrough mechanism for debt trading called for bythe Prime Minister’s Decision No. 109/2003 / QD-TTg as well as other guidingcirculars issued by the ministry.
Beyond the acquisition of bad debts, DATC’s creditors have not recordedsignificant improvement during the agency’s debt recovery process, while itsfinancial resources, with a charted capital of about 267 million USD, waslimited compared to the current demand for debt processing, the ministry noted.
To address these shortcomings, the MoF is preparing a new decree to enhance theDATC’s performance, create a legal framework for the formation and developmentof a proper market for trading NPLs, and improve State management of theproblem.
The new decree will increase the DATC’s core business rights, enabling it torequisition information and documents relating to debts and assets fromcreditors and other related parties, and giving it the right to handlecollateral assets.
It will also be able to request the assistance of State agencies in obtainingand finalising legal documents needed to secure assets during debt recovery andask courts to apply simplified dispute settlement procedures.
Furthermore, it will be entitled to sell any receivable debts or other suitableforms of security assets.
The MoF said it was hopeful that these additional functions will facilitateDATC in better fulfilling its mandate in the future.
The DATC has acknowledged the difficulties and challenges it is facing as theNPLs market becomes more competitive while specific mechanisms and policies ondebt processing are yet to be completed.
With the Government focusing on restructuring the financial and banking system,the demand for bad debt processing in credit institutions and SOEs hasincreased in value and number.
By the end of this year, the DATC hopes to complete several debt purchase negotiationseven as it coordinates with other ministries to speed up the restructuring ofSOEs.
Doꦏan Van Thang, General Director the Vietnam Asset Management Company (VAMC),said that the country does have a recognised debt trading market, but itsoperations were first limited to the DATC, and later the VAMC.-VNS/VNA
