The sustainability of Microfinance institutions in Vietnam: Circumstances and implications

This post is also available in: Tiếng Việt (Vietnamese)

After 25 years of opening and integrating, the economy of Vietnam has had just significant achievements, has sustained a stable increase yearly, the individual income has been gradually improved, the percentage of population living below the national poverty line has sharply dropped. Until the end of 2012, the percentage of household in poverty is 9,64%, the number of household in hunger has decreased 27,6% compared to 2011. However, the ratio of household in hunger in Vietnam is still relatively high.

To accomplish the strategy of developing economy and society 2011-2012, Vietnam Party, Government and The State Bank of Vietnam have had many actions/programs to decrease the gap between the poor and the rich by policies of reducing poverty and eliminating hunger through Vietnam Bank for Social Policies, People’s Credit Fund system as well as providing the best conditions for operations of licensed Microfinance Institutions, programs, projects obtaining microfinance activities. Despites the achievement, the microfinance activities in Vietnam still hasn’t taken full advantage of its potential and capacity. It is rooted from the lack of focus on the knowledge of microfinance activists, and the support of the society for financial field that lead to the limitations in microfinance environment.

At the 7th conference session XII, 16/6/2010, National Assembly of the Socialist Republic of Vietnam passed the law on Credit Institutions No. 47/2010/QH12. For the first time, microfinance institution is considered a type of credit fund in the credit institutions system of Vietnam. What microfinance institutions officially operate under the regulations of Law on Credit Institutions is big jump in the microfinance sector, that is the strong legal platform to concrete and enhance the stability towards microfinance institutions along with other types of credit funds to develop in microfinance sector implementing the strategy of developing economy and society, as a result enhancing the process of eliminating poverty and hunger in Vietnam.

However, to get the comprehension from the society and the needed agreement to build up the best environment (about law, goals, structure, stability, management…) for microfinance operations, the analysis of “The sustainability of Microfinance Institutions in Vietnam: Circumstance and implications” by Associate Prof. PhD. Nguyễn Kim Anh and PhD. Lê Thanh Tâm was published. The analysis is a valuable material for govenment authorities, policy makers, managers of microfinance activities and scientists to have a deeper understanding about the reality of Vietnam and the world experience on microfinance sector. This is indeed a valuable research scientist in the field of microfinance in Vietnam the present time and in the future.

The VMFWG hereby presents the report to the readers.  We welcome your comments and ideas for improvement in the next studies.

Please download the research report here