This post is also available in: Tiếng Việt (Vietnamese)
From April 12 to April 13, the Vietnam Microfinance Working Group (VMFWG) participate in the workshop on “Microfinance and the registration process of MFIs in Vietnam” sponsored by the Ministry of Planning and Investment (MPI) in cooperation with the State Bank of Vietnam (SBV) and the International Fund for Agricultural Development in Vietnam (IFAD).
During the workshop, participants are introduced to an overview of IFAD’s microfinance activities in Vietnam including 11 Women Development Fund (WDFs) supported by IFAD and their strategy to becoming a licensed microfinance institution; the system of legal framework on microfinance; Capacity building for the WDFs and the role of IFAD in the Country Opportunities Strategic Programme (COSOP) in the period of 2019 – 2025, and so on.
The workshop aims to raise stakeholder’s knowledge on supervisory management systems, operational standards and financial management in microfinance institutions as well as the challenges currently faced by MFIs; provide a common vision for the establishment of a microfinance institution financed by IFAD and identify key elements for the registration of licensed microfinance institutions. At the same time, it drafts the action plan for the Women Development Support Funds which have enough capacity to register as a licensed microfinance institutions. Attending the workshop are representatives from the Office of the Government, the Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam and the Vietnam Women’s Union, IFAD loan projects and IFAD-funded WDFs from 11 provinces.
Attending the workshop, in addition to the overall facilitator role, Mrs. Nguyen Thi Tuyet Mai – Managing Director of the VMFWG provide a presentation on the current context and development challenges of the microfinance industry in Vietnam at the moment. An important point marked in the presentation is the increasing change in the microfinance market with the development of modern banking technology (i.e: Fintech companies) and the possibility of cooperation between MFIs with these companies. Specifically, according to a recent research carried by VMFWG, there are 40 commercial banks in Vietnam have already cooperated with fintech companies to implement the e-wallet program, of which 20 have owned 9.6 million accounts, increased up to 152% in one year (For example, Momo e-wallet has more than 1 million Vietcombank accounts, of which 40% of the accounts comes from rural areas; Lien Viet Post Bank and their e-wallet product – Vi Viet currently owns 700,000 accounts with the support of the Vietnam Women’s Union ).
According to Mrs. Nguyen Thi Tuyet Mai, microfinance programs and projects in Vietnam are now “sheltering in a box” when most of them have not caught up with the current trend of digital technology. Moreover, despite significant changes in the legal framework in recent years, there are still many obstacles hindering the creativity and risk-taking ability of microfinance organizations.
The presentation also pointed out that the financial market in Vietnam is diversifying with many “hot spots”, but there has been a significant lack of information sharing and cooperation among related parties, along with the difference in the perception about the development orientation of the market. Thus, the current context poses many challenges and opportunities for cooperation and integration between MFIs and commercial banks, Fintech companies, etc. Emphasizing the role of VMFWG in policy advocacy and sector coordination, Mrs. Nguyen Thi Tuyet Mai states that in the coming time, the Group will continue to collect and synthesize information to provide timely recommendations to policy makers, thereby creating a favorable development environment for MFIs in Vietnam.
During the two days of the workshop, 07 microfinance programs and projects financed by IFAD also present their practice and strategy development plan to become a licensed microfinance institution in the near future. Difficulties and challenges are being discussed among the participants with the participation of representatives from the SBV. To wrap up the workshop, Mr. Thomas Rath – IFAD’s Director in Vietnam claims that IFAD will continue to support microfinance institutions in Vietnam in various ways such as direct investment, TA support for training courses, or calling for foreign investment partners to invest in Vietnam. In addition, he also wishes to organize more study tour between local and international microfinance institutions. He also emphasizes that although organizations might be reluctant to compete with commercial banks as well as technology companies, competition is key to help sharpen their thinking and strengthen the operation of organizations. The idea of establishing a non-profit financial intermediary funded by IFAD also receives support from the organizations attending the workshop.