Foreign financial experts have cast doubt on a quick fix for bad debt in Vietnam, saying the country lacks a clear mechanism for debt settlement.

Darry Dong, a global financial market expert at International Finance Corporation (IFC), said Vietnam lacked a mechanism for foreign investors to get involved in settlements of bad debt. Few foreign investors pay attention to bad debt settlements here due to the unclear mechanism.

Investors would buy debts here in the country if the mechanism was favorable, Dong told a seminar on debt settlements held by IFC in Hanoi on Tuesday and attended by debt settlement experts from many banks.

P. Varangis, IFC global head for small and medium enterprises, said Vietnam has yet to reach a consensus on the national asset management company (AMC). He asked if it would be established by the State or through a public-private partnership.

The scheme for AMC establishment was submitted to the Government on December 27 and will be passed this month.

Time is an enemy of bad debt, said Dong. The longer bad debt settlement is delayed, the costlier it will be, said Sameer Goyal, the country coordinator for finance and private sector of the World Bank.

According to international accounting standards, the bad debt ratio of Vietnam may be three times higher than the 8.6% announced by the central bank, said Goyal.

The Saigon Times Daily