How policy credit fuelled Ho Chi Minh City’s 50-year rise

Fifty years after the liberation of Ho Chi Minh City and national reunification, the southern metropolis has undergone a remarkable transformation, evolving into Vietnam’s leading economic, cultural, and educational hub.

Behind this development is a quiet yet pivotal force: the policy credit system, acting as an extended arm of the Party, the state, and local authorities, playing a crucial role in boosting economic growth, jobs, incomes, and poverty reduction, all while improving the quality of life for the city’s residents.

From modest beginnings with an initial capital of just VND152 billion ($6.1 million), as of the end of March this year, the total amount of policy credit capital managed by the Ho Chi Minh City branch of Vietnam Bank for Social Policies (VBSP) has surpassed $536 million, an 88-fold increase.

Capital from the city’s local budget accounts for just over 65 per cent of the total, reflecting the strong commitment of the municipal Party Committee and authorities to social policy credit.

Since launching the Hunger Eradication and Poverty Reduction Programme in 1992, currently known as the Sustainable Poverty Reduction Programme, Ho Chi Minh City is now in the seventh phase of the initiative, lasting from 2021-2025, with the poverty line adjusted 11 times to better reflect economic realities.

VBSP’s preferential credit schemes, funded by both central and local government sources, have been tailored to actual grassroots needs. These loans have become a tangible and impactful part of daily life, recognised by local authorities and welcomed by the public-especially low-income households and other vulnerable groups- as a symbol of trust in the Party and state.

Social policy loans have reached all residential groups and neighbourhoods across the city. These funds have supported the poor and policy beneficiaries in diversifying their livelihoods, restructuring agricultural activities, and creating jobs.

As a result, many impoverished households have improved their standards of living and gained the confidence to assert their place in society.

A case in point is the family of Pham Thi Thanh Tuyen, a resident of Tam Phu ward, in Thu Duc city of Ho Chi Minh City.

Once struggling to make ends meet, Tuyen received a $4,000 loan from VBSP and invested in a shoelace weaving machinery line and raw materials.

Her small workshop quickly gained market traction and became the family's primary source of income, enabling her to better care for her loved ones.

Similarly, the family of Vu Thi Nam of Thoi An ward, District 12, used long-term preferential credit to expand her small business.

With the additional funding, her household and others in the area have been able to scale up production, improve product quality, generate employment, and even hire additional local workers.

These personal success stories highlight the transformative power of policy credit and underscore the VBSP’s essential role in the city’s sustainable development.

Over the past 20 years, the bank has disbursed more than $860 million in loans to over one million disadvantaged households and policy beneficiaries, helping Ho Chi Minh City effectively eliminate poverty according to national standards.

The bank’s diverse credit programmes support a wide range of vulnerable populations, such as students from low-income families, households affected by the city’s urban embellishment projects to renovate or build new houses, and many others facing socioeconomic challenges.

Beyond socioeconomic impacts, these credit schemes also form the financial foundation for implementing environmental protection initiatives and other key development projects across the city.

According to reports, over 205,000 clients in Ho Chi Minh City are receiving support through VBSP, with total outstanding loans approximating $490 million. Of these, loans aimed at generating livelihoods and employment account for $429 million, equal to 88 per cent of the total portfolio, demonstrating a concrete proof of VBSP’s indispensable role in the city's development trajectory.

Building on these achievements, VBSP’s Ho Chi Minh City branch continues to write new chapters in the city’s development journey. With dedication and full energy, its staff are helping ensure that every city citizen has the opportunity to shape their own future. These all efforts contribute to building an inclusive and sustainable economy where no one is left behind.

By Hong Thuy - Vietnam Investment Review