AMC a knight in shining armor

14:21 | 20/11/2012
Founding a national Asset Management Company (AMC) is believed to be one way to radically address the nation’s rock economic situation. National Assembly Finance and Budget Committee’s standing member Bui Duc Thu brings some light to AMC model.

The public expects  an AMC would be a breakthrough in tackling bad debts. You agree?

Many banks have founded debt trading companies.

However, these firms are proven less effective in dealing with their bad debts, just moving debts from one entity to another within the banking system. Hence, to bring bad debts out from the banking sector, the government proposed forming an AMC.

In my view, this is one of effective solutions to address credit hurdles in the near-term, but this does not mean the economy’s total bad debt will go down. This remedy would help facilitate credit flow and revive the economy in the near term but generally speaking, AMC alone could not radically tackle the bad debt issue.

How to radically address bad debt issue then?

We need to help debtors to expedite effective production, preserve capital sources and be in a position to pay back loans. In other words, measure packages to boost competitiveness of the economy and propel economic restructuring are crucial. The root of bad debts would still exist unless there were marked improvements to economic efficiency. The government’s current solutions like reducing unsold stock or founding debt trading company would only bring short-term effects.

Founding an AMC is important but why has  the state yet to call for investment from other sources in the face of a limited budget?

In essence, AMC is a risky business field. As a business, it needs to operate effectively, preserve capital and produce profits. Risky investments, however, remain underdeveloped in Vietnam, and as far as I know firms are not keen on adventurous investments like trading in bad debts in current context.

Thereby, to shortly tackle bad debts the state needs to found AMC. However, in principle this company should not be fed using state budget but must call capital from other sources.

AMC model will be reviewed after it went into operation in a certain period of time, from  there developing relevant legal framework. If by that time firms wanted to give birth to debt trading companies their proposals would be green-lighted assuming they met Law on Enterprises’ regulations and relevant conditions pertaining to debt trading.

AMC reportedly consists of members coming from different ministries and state agencies, but people worry about less effective coordination. Is that the case?

A final decision about the AMC plan is still awaiting government approval. A business ought to be operating within the laws and under market rules. When a business entity is set up, the company members need to share responsibilities and joint efforts to ensure it running effectively and profitably.

By Thuy Lien

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