Decision No. 105/2007/QD-TTg On approving the Orientation of National Housing Financial Policy until 2020

DECISION OF THE PRIME MINISTER

Approving the Orientation of National Housing Financial Policy to 2020

To the year 2020

PRIME MINISTER

Based on the Law on the Organization of the Government dated December 25, 2001;

Pursuant to the Law on the State Bank of Vietnam dated December 12, 1997; the Law Amending and Supplementing Certain Provisions of the Law on the State Bank of Vietnam dated June 17, 2003;

Pursuant to the Loan Agreement No. 1990-VIE (SF) signed on July 31, 2003 between the Socialist Republic of Vietnam and the Asian Development Bank (ADB);

Considering the proposal of the Governor of the State Bank of Vietnam at the report No. 28/TTr-NHNN dated March 30, 2007,

DECISION:

Article 1. Approves the Orientation of National Housing Financial Policy to 2020 with the main contents as follows:

I. OBJECTIVES

Striving to build a sound, effective, and sustainable housing financial system, contributing to promoting economic and social development of the country; creating jobs, increasing income, and improving the quality of life for the people, especially through increasing the ownership rate of houses for the people. To achieve this goal, it is necessary to establish a synchronized mechanism and policy system, legal framework, creating a favorable, attractive, and transparent environment for organizations and individuals to participate in building and developing the national housing financial system.

II. PRINCIPLES

The orientation of national housing financial policy to 2020 is built in accordance with the strategic viewpoint and policies of the Party and the Government of Vietnam on socio-economic development to 2010 and the orientation of development to 2020, specifically:

1. The orientation of housing financial policy must thoroughly implement the idea of relying on internal strength and attaching importance to external strength (internal strength is decisive, external strength is important); it is necessary to release internal strength, exploit and promote internal strength, while internalizing external strength, making external strength contribute to increasing internal strength;

2. The orientation of housing financial policy focuses on developing housing financial relations that adapt to the market mechanism. In the early stage of housing finance development, the State plays a leading role in consolidating and developing the primary mortgage market, forming and developing the secondary mortgage market. The national housing financial policy orientation will include measures to create conditions for social policy beneficiaries to access capital for housing purposes;

3. The orientation of housing financial policy must demonstrate the highest capacity to mobilize and utilize financial resources for housing, particularly medium and long-term financial resources, allocate and use these resources effectively, contributing to increasing the ownership rate of houses for the people;

4. The orientation of housing financial policy serves as the basis for establishing a legal framework for the State to manage housing finance by law;

5. The orientation of housing financial policy is built based on the coordination of several important economic policies such as: capital mobilization policy, policy to enhance institutional capacity for financial institutions participating, public financial policy, construction policy, and land policy. At the same time, the national housing financial policy is built in accordance with the strategic viewpoint on housing development approved by the Prime Minister in Decision No. 76/2004/QĐ-TTg dated May 6, 2004 approving the Orientation of Housing Development to 2020.

III. SOLUTIONS

Building mechanisms, policies, perfecting legal regulations to encourage, promote, and manage the development and operation of the housing financial system, specifically:

1. Building mechanisms for capital mobilization, particularly medium and long-term capital for the housing sector:

a) Encouraging individuals and households to save at commercial banks and credit organizations to purchase and improve housing through housing savings contract mechanisms within the banking system and credit organizations; implementing tax incentives, partial interest rate support, or savings rewards,... to encourage individuals, households, banks, and credit organizations to participate in this mechanism;

b) Establishing a mortgage refinancing agency as a tool for the Government to regulate and promote the development of the housing financial system in Vietnam. Initially, the mortgage refinancing agency will operate under an appropriate mechanism, mobilizing and utilizing various sources of capital such as ODA loans, government-guaranteed bond issuance, and other lawful sources to carry out refinancing operations, purchasing eligible housing loans from primary mortgage market financial institutions, helping these institutions expand housing lending and promote the development of the primary mortgage market. When the primary mortgage market and capital market have converged sufficient conditions regarding scale and legal foundation, the mortgage refinancing agency will issue mortgage-backed securities - securitizing mortgage loans, performing the function of a channel for medium and long-term capital flow from the capital market to the mortgage market;

c) The State has special mechanisms to mobilize housing capital for social policy beneficiaries, first by establishing Housing Development Funds at localities in the spirit of Decision No. 76/2004/QĐ-TTg dated May 6, 2004 approving the Orientation of Housing Development to 2020; supporting some localities to pilot the Project to Develop Housing for Low-Income Groups in Urban Areas and Concentrated Industrial Zones, including Hanoi, Ho Chi Minh City, Hai Phong City, Binh Duong, and Dong Nai.

2. Enhancing the institutional capacity of mortgage lending financial institutions:

a) Building a quick, efficient, safe, and accessible mortgage lending system; ensuring the control and recovery of mortgage loan debts; standardizing real estate mortgage activities within the credit organization system; standardizing mortgage lending tools and procedures;

b) Encouraging financial institutions to enhance their financial management and competitive capabilities in the real estate lending sector;

c) Studying and promulgating a unified set of criteria in loan appraisal files, uniformly applied to all financial institutions.

d) Study and establish mandatory insurance regulations for mortgaged property; develop insurance and guarantee policies for mortgage loans;

đ) Encourage the application of information technology in real estate mortgage lending within the banking system and credit organizations;

e) Encourage financial institutions to develop diverse and rich housing financial products that meet market demands.

3. Support Policies:

Implement direct or indirect public financial policies to support and encourage organizations and individuals to participate in developing the housing finance system, specifically:

a) Market Development Support:

- Establish mechanisms and policies to support part of the interest rate or savings rewards for financial institutions and individuals participating in savings-housing contract programs;

- The Government has mechanisms and policies to support initial capital to establish and operate a secondary mortgage loan refinancing agency as a driving force to promote the development of the primary market and prepare for the establishment and operation of the secondary mortgage market.

b) Support for Social Policy Targets:

- Develop policies to support and encourage investment in social housing projects through tax incentives and infrastructure construction support;

- Support social policy targets to access and pay for housing finance sources through credit, interest rate, insurance, and mortgage loan guarantee policies for these targets.

4. Improve Legal Framework for Housing Finance:

a) Improve legal provisions on land rights, housing rights; civil transactions, security transactions; real estate registration, security transaction registration; valuation, auction, and real estate business;

b) Build a comprehensive land information system that regularly updates land changes, ensuring transparency, clarity, accuracy, and easy accessibility for relevant organizations and individuals;

c) Improve the asset valuation system including real estate (land and assets attached to land) to provide a basis for housing and real estate valuation, providing information to individuals, credit organizations, and investors;

d) Unify and centralize legal provisions on proof of land use rights, ownership rights of houses and other real estates to ensure administrative reform requirements and facilitate all individuals and organizations when registering real estate (one-stop, one-stamp, one-paper, one-procedure).

IV. IMPLEMENTATION

1. Assign the State Bank of Vietnam

a) Serve as the coordinating body with relevant Ministries and agencies to implement the National Housing Finance Policy Orientation until 2020; monitor and periodically report to the Prime Minister on implementation status and results;

b) Lead and coordinate with relevant Ministries and sectors to study and build savings-housing programs to create funding sources for the housing sector, suitable to Vietnam's current conditions (by 2007);

c) Study and promulgate a unified set of criteria for assessing housing loans to be applied nationwide (by 2007);

d) Continue to accelerate the process of bank sector reform and modernize the banking information system in line with the Vietnam Banking Development Project until 2010 and orientation until 2020 approved by the Prime Minister;

đ) Take measures to encourage commercial banks to diversify housing financial products, enhance organizational capacity, and apply advanced technologies and management methods in housing loans;

e) Study and build a proposal to establish a mortgage loan refinancing agency with appropriate models and operational mechanisms to promote the development of the housing finance system according to set goals.

2. Entrust the Ministry of Finance:

a) Improve the asset valuation system; issue documents and regulations on criteria and mechanisms for organizing asset valuation (before 2008);

b) Study and propose the issuance of insurance mechanisms for collateral assets, insurance, and guarantees for mortgage loans suitable to the country's economic development conditions to encourage financial institutions to increase housing loans;

c) Lead and coordinate with relevant Ministries and sectors to study, build, and submit to competent authorities for approval preferential and support policies for housing construction, particularly low-income housing (by 2007);

d) Continue to develop and expand the capital market, especially the bond market, to create conditions for the issuance of mortgage bonds (bonds guaranteed by housing mortgage loans) when appropriate.

3. Assign the Ministry of Natural Resources and Environment:

a) Study and propose improvements to regulations on land users' rights; regulations on procedures for implementing land users' rights towards simplification and ease of execution;

b) Strengthen guidance to complete cadastral surveying, map creation, land use right certificate issuance, and timely updating of land changes in cadastral records;

c) Direct the construction and operation of a land information system towards informatization to ensure completeness, transparency, and easy accessibility.

4. Assign the Ministry of Construction:

a) Guide the implementation of house ownership certificate issuance according to Decree No. 90/2006/NĐ-CP dated September 6, 2006, of the Government detailing and guiding the implementation of the Law on Housing (by 2007);

b) Guide the method for determining construction costs of houses to serve as a basis for determining the value of houses when implementing mortgage loans (before 2008);

c) Lead and direct localities to build five-year social housing development programs and annual social housing development plans, compiling them into a national social housing development program to be submitted to the Prime Minister for approval;

d) Implement guidance to carry out the Housing Development Orientation until 2020 and the Social Housing Project.

5. Assign the Ministry of Justice:

a) Continue to study and perfect the Law on Real Estate Registration so that the Government can consider submitting it to the National Assembly towards building a centralized and unified registration system that meets management requirements but simplifies procedures, facilitating organizations and individuals in certifying rights and real estate transactions;

b) Review and propose amendments and supplements to related legal documents concerning housing finance in line with international standards, suitable for actual conditions in Vietnam, ensuring fairness, transparency, and the interests of all parties involved;

6. Entrust the Ministry of Planning and Investment:

a) Coordinate with relevant ministries and sectors to research policies for attracting foreign investment to participate in developing the Vietnamese housing finance market;

b) Include projects related to housing finance in the list of projects calling for ODA funding;

c) Incorporate the development of housing finance into economic and social development plans starting from 2008;

7. Entrust the People's Committees of provinces and centrally governed cities:

a) Supervise and manage to ensure effective and fair use of local housing development funds through establishing appropriate mechanisms combining state capital, corporate capital, and individual capital in local housing development;

b) Accelerate the issuance of land use right certificates, focusing on resolving the issuance of land use right certificates for urban areas in 2007;

Article 2. This Decision shall take effect fifteen days after its publication in the Official Gazette;

Article 3. The Governor of the State Bank of Vietnam, Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial and centrally governed city People's Committees are responsible for implementing this Decision./.