HANOI, June 9 (Xinhua) -- The number of new property companies that opened in the first five months of this year in Vietnam plunged 61.4 percent from a year earlier, with more than 550 companies dissolved, up 30.4 percent year on year, the Vietnam News newspaper reported on Friday.
Property companies, grappling with funding woes, have suspended thousands of real estate projects worth 800 trillion Vietnamese dong (33.7 billion U.S. dollars), according to the Vietnam National Real Estate Association.
Deputy Prime Minister Le Minh Khai told the National Assembly on Thursday that spillovers from the property sector and corporate bond market have negatively affected the government's management of macro-economy and business activities in other sectors.
"The bond market has yet to develop in a sustainable way," said the deputy prime minister. "It is estimated that about 290 trillion Vietnamese dong (12.2 billion dollars) in corporate bonds is scheduled to mature this year."
The liquidity squeeze on the market for privately placed corporate bonds, which have been widely used by real estate firms to raise capital, is not over yet.
According to the Vietnam Bond Market Association, in the period from January to May, corporate bond issuance slumped 70 percent to only 34.25 trillion Vietnamese dong (1.44 billion dollars) compared to the same period last year.
Meanwhile, the volume of premature redemption has soared. As of June 2, Vietnam's corporate bonds worth 76.5 trillion Vietnamese dong (3.2 billion U.S. dollars) have been redeemed before maturity, up 70.6 percent from a year ago, according to data from the Hanoi Stock Exchange.
"Problems in the sector remain unsolved for quite a while, driving firms into distress," the Vietnam Association of Realtors said in a recent report. "Companies have been stretched to their limit. If they are left drowning in hardship for longer, mass bankruptcies would be inevitable."
The sluggishness in the property sector, with many developers grappling with a debt crisis, has kept both banks and home buyers reluctant to engage in transactions.
In the January-March period, the number of newly-licensed housing projects plummeted 56 percent, existing development projects plunged 43 percent and completed property projects fell 36 percent from a year ago.
As the property market contributes about 15 percent of the Southeast Asian country's GDP, Prime Minister Pham Minh Chinh has urged measures to support the sector in a bid to fuel economic growth which fell to 3.32 percent in the first quarter.