Enhance the role of bad debt buyers towards building a primary debt trading market in Vietnam

Abstract

Over the past few years, impacts of bad debt problems has directly influenced in development of the banking
system and the economy. To address this situation, diversification of bad debt purchasers in the primary market
is being considered as one of the key solutions by the Government and the State Bank of Vietnam. Accordingly,
credit institutions may choose to sell bad debts to other credit institutions, professional debt trading companies
such as VAMC, DATC, AMCs, Debt trading service companies or Domestic and foreign organizations and
individuals who have demand. Each debt buyer has its own legal characteristics as well as advantages. However,
it can easily be seen that the Asset Management Company of Vietnam Credit Institutions (VAMC) is playing a key
role. At the same time, they will also orient the activities of other debt purchasers in buying bad debts of credit
institutions. However, in order to further promote the role of these entities, the Government and the State Bank of
Vietnam should consider measures to increase VAMC’s capital to increase their ability to buy bad debts at market
price, or it can be focused in the private AMC to create a systematic link among these AMCs, thereby increasing
accessibility to bad loans by banks. These solutions should be carried out to establish of the bad debt trading
market in Vietnam gradually