A social housing accommodation area for workers in HCM City’s Bình Tân District.— VNA/VNS Photo

HCM CITY - The Government is set to implement a state-funded credit package valued at VNĐ30 trillion (US$1.2 billion) aimed at enhancing social housing initiatives and replacing the current package that was deemed ineffective.

Speaking at a meeting late last week, Prime Minister Phạm Minh Chính urged the Ministry of Construction to conduct a ‘comprehensive study’ of the new credit package this month.

The objective of the new package is to provide low-income homebuyers with access to loans for the purchase and rental of social housing.

Distinct from the existing VNĐ120 trillion package, which is exclusively financed through commercial banks, the new credit package will be sourced from State funds.

Half of the proposed funding will be generated through the issuance of Government bonds, while the remaining funds will be allocated from local budgets, according to the PM.

The ministry had previously proposed that the State Bank of Vietnam (SBV) consider a new preferential loan package for social housing buyers, which would feature interest rates 3-5 percentage points lower than those of commercial loans, with terms of 10 to 15 years.

The proposed interest rate is more favourable than the current VNĐ120 trillion preferential credit package, which only offers rates 1.5-3 percentage points lower than standard commercial loan rates.

However, disbursement results have been sluggish, with only around 1 per cent, or VNĐ1.34 trillion, disbursed after one year, according to a report by the ministry.

Experts have cautioned that delays in disbursing the preferential credit package may hinder the timeline for constructing one million social housing units by 2030, including the completion of 428,000 units by 2025.

Currently, the country has achieved 36 per cent of the 2025 target through ongoing and completed projects.

However, both Hà Nội and HCM City have seen insufficient progress, falling short of 40 per cent of their established targets.

For example, Hà Nội is required to construct 18,700 units by 2025, however, only three projects have been initiated (resulting in 1,700 units).

Five projects have been completed in Hà Nội, totaling around 5,200 units, which accounts for nearly 37 per cent of the objective.

More than 500 social housing projects are underway across Việt Nam, with 79 having been completed, resulting in over 40,700 apartments as of mid-July.