Assessment of the World Bank on the role and achievement of Vietnam Bank for Social Policies

Mr. Alwaleed Alatabani

Lead Financial Sector Specialist

Finance, Competitiveness and Innovation Global Practice East Asia and Pacific Region, World Bank in Vietnam

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His Excellency, Mr. Tran Quoc Vuong, Member of the Politburo, Standing Member of the Secretariat of the Central Committee of the Communist Party of Vietnam,

His Excellency, Mr. Nguyen Van Binh, Member of the Politburo, Secretary of the Party Central Committee, Head of the Central Economic Committee of the Communist Party of Vietnam,

Distinguished guests!

Ladies and Gentlemen!

It’s a great honor for me, on behalf of the World Bank in Vietnam, to attend this online National Conference on the review of the 5 year implementation of Directive No. 40 of the Secretariat of the Central Committee of the Communist Party of Vietnam on strengthening the Party's leadership for social policy credit.

As you may know, a credit model for development or policy credit with the support of the Governments is the model that has been applied in many countries around the world. However the number of successful models is few thus far. Vietnam Bank for Social Policies (VBSP) is one among them, which is currently the leading microfinance provider in Vietnam and one of the largest microfinance providers in Asia.

 This success is thanks to Vietnam’s careful study of global  experience and finding its own path that is suitable for Vietnam's culture, history and social structure. It is the establishment of a strong leadership and partnership relationship between the Party committees, the Government authorities with VBSP and socio-political organizations from the central to local levels in the provision and supervision of policy credit. It is also the combination of credit with national target programs and projects to encourage economic development and application of new science and technology. The success of the implementation of social policy credit in Vietnam also contributes to Vietnam's early achievement of the millennium goals. I am very impressed with the achievements of VBSP, especially in recent years. VBSP is extending loans to more than 6.5 million households through a nationwide network including 63 provincial branches, 631 district transaction offices, more than 10,400 transaction points at the commune level and nearly 175,000 savings and loan groups. Through this network, VBSP has accessed to about 92% of the total number of borrowers and accounts for 87% of the total value of loans in Vietnam's microfinance market (MIX 2018). It can be seen that currently VBSP has become a very important organization with its coverage throughout Vietnam, playing a key role in building a comprehensive financial system in Vietnam. Without the key role of VBSP, the promotion of financial inclusion in Vietnam would not be a reality. From 2018, within the  Financial Inclusion Support Framework (FISF) , the World Bank has conducted an assessment of the Vietnam Bank for Social Policies, the purpose of which is to evaluate the effectiveness of the implementation of the goals  in VBSP's development strategy for the period of 2011-2020 and propose solutions for the strategy in next phase of VBSP. The results show that VBSP has basically achieved the goals set out in its development strategy for the period 2011-2020, which is to diversify products and services and actually, VBSP has moved towards an environment of more diversified products. Now VBSP has been providing a set of various credit products, with more than 20 credit programs for different types of lending needs, offered at preferential interest rates or close to the market rates. Credit is the main product of VBSP, but savings are gradually increasing from low to significant level. With the leadership of the Communist Party of Vietnam and the Government's efforts, VBSP loans have brought many positive socio-economic impacts in recent years, ensuring the right and capacity of access to finance for disadvantaged groups in Vietnam. With the results in the management and operations of VBSP, the WB appreciates VBSP model and wishes to publicize the Report on the WB website in order to promote knowledge sharing and exchange regarding state-owned financial institutions across the globe. As a leading microfinance provider in Vietnam, the development journey of VBSP offers valuable experience and lessons learnt to other governments. 

In the future, one of the important points that our evaluation has made is that we believe that VBSP can basically continue to modernize the operating model and improve the products in the direction of automation. For example, it is possible to consider investment in the development of electronic payments, digital payments and other services that VBSP can provide to better serve the poor and other policy beneficiaries. I think that it is extremely important for the future of VBSP to strengthen the ability and potential in serving more and more vulnerable groups, focusing on the segments not servedby commercial credit institutions such as providing modern banking services to customers in remote areas. This helps VBSP take advantage of its network and customer coverage, maintain its ability of serving more clients in spite of decreasing ratio of State subsidy, and move towards financial sustainability.

 I would like to thank you for your attention and wish VBSP’s credit model under the leadership of the Communist Party of Vietnam and the Government of Vietnam to develop and more sustainable, being a good example  for other countries in the world to study and apply. May I also take this opportunity, on behalf of the World Bank in Vietnam, to wish the Communist Party of Vietnam and the Government of Vietnam greater successes. Wish you all good health and happiness!Wish the conference a success!Thank you very much.