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Legal provisions on the handling of bad debts are still inadequate.

For further information, on the evening of 23rd May 2017, in Hanoi, the (Nhan Dan) People's Delegation Newspaper held a workshop on "Bad Debt Management - From Policy and Law Perspective".

Regarding the cause of bad debts, it can be seen that an increase in bad debts of the banking system does not mean that banks are inefficient, but debtors can not repay. Especially in Vietnam, due to the impact of the global financial crisis and global economic recession from 2008, our economy has suffered negative impacts and the macro economy has had many unfavourable factors. Business and production activities of enterprises are facing many difficulties and this is the main reason leading to bad debts. Thus, it can be said that bad debts are the problems of the whole economy.

According to the State Bank of Vietnam (SBV), by January 2017, the whole system of credit institutions had handled bad debts of 616.7 trillion vnd. In which, bad debts handled by credit institutions were 349.7 trillion vnd (accounting for 56.7% of the total processed bad debts), and the rest was sold to other organisations (accounting for 43.3%).

Accordingly, bad debts have been restrained, bringing bad debts to the end of February 2017 at 2.56% of total outstanding debts. Results of bad debt settlement of credit institutions through the Vietnam Asset Management Company (VAMC), from 2013 to 31st March 2017, the total debt collection through VAMC reached 53,236 billion vnd.

In the total bad debts which have been handled, the sale of assets for debt collection was relatively low at 17.1 trillion vnd (accounting for 2.8% of the total processed bad debts).

At the opening speech, Mr. Nguyen Kim Anh, the Deputy Governor of the State Bank of Vietnam said that one of the reasons making the bad debt not resolved definitely was that the legal mechanism of handling bad debt was not sufficient and inefficient. In particular, the current mechanism does not protect the legitimate interests of credit institutions, does not facilitate the right to handle collateral assets, involving many existing legal documents.

Therefore, initially, under the direction of the Government and the Politburo, the State Bank of Vietnam has intended to develop the Law amending many laws on restructuring credit institutions and dealing with bad debts. However, after many discussions, the Draft Law was amended into a draft resolution on handling bad debts of credit institutions. This draft has been widely consulted and is waiting for approval of the National Assembly at this meeting.

Regarding the draft resolution, Dr. Nguyen Duc Kien, the Deputy Chairman of the Economic Committee of the National Assembly said that the resolution introduced many new points and core issues such as not using the state budget; in line with constitutional; limiting time to complete the Resolution to avoid dependence on credit institutions. The resolution takes effect from 1st January 2017, without waiting 6 months as usual; which clearly shows the point of preserving the state capital, but still accepts the market economy. Finally, do not exclude personal liability for causing bad debts.

In particular, according to experts, the effective handling of assets requires a legal system in a consistent, transparent and appropriate manner, in line with creditor's rights. The lender establishes the legal framework for the parties involved, in particular, the creditor who has exercised its legal rights under the agreement for involved parties to handle quickly and conveniently, maximising the value of debt recovery.

Also, this legal system must be strictly enforced by the relevant agencies, organisations and parties involved in the transaction.

According to Dr. Le Xuan Nghia - the economist, credit institutions can not have enough power to recover debts, assets or buy and sell debts in the market without conflicting with other laws.

The causes were that many provisions of the Law could not protect legitimate creditors of credit institutions, preventing the creation and development of the bad debt trading market. Moreover, the provisions of the Law on property still have many obstacles and inadequacies, not ensuring the right to handle the property as the right to seize property.

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Therefore, it can be seen that the completion of the legal framework for dealing with bad debts by issuing a specialized document dealing with bad debts in the form of a resolution of the National Assembly is necessary and appropriate, in line with the Party's policies, which should be implemented promptly to carry out tasks in accordance with the resolutions of the National Assembly and the Government, as well as to meet the urgent needs of reality.