Workshop report on “Building Regulatory Framework and Resources towards a Sustainable Microfinance Sector in Vietnam”

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

On December 4th 2015, State Bank of Vietnam, the International Finance Corporation (IFC) and Vietnam Microfinance Working Group co-organized a workshop called Building regulatory framework and resources towards a sustainable microfinance sector in Vietnam in Pullman hotel, Hanoi. The workshop was co-sponsored by Citi Foundation, United Overseas Bank, ADA organization, MetLife Foundation-Give2Asia organization, and Switzerland Ministry of Economy (SECO).

With the objective of building and developing a safe, sustainable, pro-poor focus microfinance systems, these microenterprises, small businesses, contribute to the implementation of Party policy State to ensure social security and sustainable poverty reduction. The Prime Minister issued Decision No. 2195 / QD-TTg dated 06/12/2011 to approve the construction and development of the microfinance system in Vietnam 2020 (Decision 2195).

In the last three decades, microfinance activities have been constantly innovated, growing both in scale and diversity, and contributing to the national economic development and poverty reduction of the country. The poverty rate in Vietnam was around 7.6% – 7.8% in 2013 and by the end of 2014, the national poverty rate was only 5,8 – 6% as social security, household incomes, health, education, role and position of low-income people in the family and society was improved – though lending microfinance funds are very limited.

The workshop was to update regulations and completing orientation, legal documents about microfinance operations in Vietnam, and preliminary implementation of Decision No. 2195 for the period 2012 – 2014. The implementation of the Decision of the Prime Minister is about to complete phase 1 (2011 – 2015) with some of the results achieved by the attention and leadership of the Party, State and Government in creating a legal framework, facilitating the development of microfinance, attracting capital for microfinance activities with the overall plan of economic development of the country in the past period is the basis for supporting microfinance activities. Moreover, a shift in perception towards microfinance activities of the state authorities, the provincial, city, organizations (especially political institutions and social) and people created a standing ground for microfinance to growing both in width and depth.

Through the assessment in 2012 – 2014 period, the Prime Minister has a direct document to the ministries and related units to promote the deployment of  the solution and microfinance activities under Decision 2195 in the near future.

One solution proposed out by Prime Minister in Decision 2195 is perfecting the legal environment and having comprehensive policies, consistent with the characteristics of the activities of microfinance. Accordingly, the representative team conducted a research titled: “Conversion of Microfinance Organizations in Vietnam: Impact assessment with recommendations and proposals” presented the analysis and assessment based on the experience of 03 successfully converted MFIs in Vietnam and propose measures and recommendations for microfinance institutions, the State management agencies and other stakeholders to create an enabling environment to support the transition, encourage MFIs transformed into licensed institutions and soon had the initiatiion, plans and appropriate solutions.

The seminar also shared the microfinance market development experience in Cambodia of Mr. Ban Lim, Head of Legal Department, Central Bank of Cambodia and the international experience of investment and development of microfinance through the presentation of the funding microfinance model in the world and the role of governments, sponsors and investors in promoting the strong development of the capital market – by Ms Nguyen Hanh Nam, chief expert on investment activities in the Mekong’s Financial Institutions Committee, East Asia Pacific of IFC. This experience is absolutly useful for the implementation of measures to allocate funds to support microfinance activities that Prime Minister has asked the Ministries / agencies to perform. One important contents of the seminar included the presentation on Impact Fund of United Oversea Bank.

The workshop has received the attention of 130 representatives from: the Government, the Working Microfinance Government, State Bank of Vietnam, the Ministry of Finance, other ministries, agencies and organizations, sponsors, international organizations, investment units, MF projects, MFIs…

Please see more details here