International relation activities in 2007

Besides maintaining relationship with traditional partners, VBSP has set up relations with private-owned development funds such as Ford Foundation and also with Multi-national Corporation like Unilever, as well as with bilateral development agencies from United States (USAID), Australia (AUSAID) and United Kingdom.

In 2007, VBSP actively joined in activities held by APRACA and ASEAN Banking Association. Under the framework of cooperation with APRACA, VBSP sent a delegation (in October 2007) to Thailand to participate in the 2nd World Summit on Rural Finance, sending a delegation with members from the Information Technology Center to Singapore for visiting and learning successful experience from Singapore Development Bank held by the Banking Association (in August 2007).  

Together with studying and exchanging experience abroad, VBSP also received and introduced its operations and experience to foreign delegations who paid working visits to VBSP: Receiving and introducing VBSP’s lending activities to United States Agency for International Development (USAID) – March, 2007; receiving and introducing VBSP’s policy lending activities to the working group of China Development Bank (April, 2007); receiving and introducing VBSP’s policy lending activities to the delegation of International Fund for Agriculture Development  (IFAD) -  Bangladesh (August, 2007); receiving and introducing transaction activities of VBSP at communes to Palli Karma-Sahayak Fund (PKSF) – one of the financial institutions giving loans for poverty reduction  established by Bangladeshi Government (December, 2007).

VBSP became the new member of Asia-Pacific Regional Banking With The Poor Network (BWTP) in June, 2007. Being a member of this network, VBSP will be one of the institutions in co-hosting Asia Microfinance Forum held in Hanoi in 2008 funded by Citigroup. 

Project management

The project management activities of VBSP in 2007 gained much remarkable achievements based on results obtained over the past years combined with great efforts of the whole system. Through project implementation activities, capital resources and target clients of VBSP have been increased.

The Forest Sector Development Project

The Government of Vietnam (GoV) and the World Bank (WB) have identified the Forest Sector Development Project (FSDP) within the framework of the Forest Sector Support Program (FSSP) and the respective partnership between the Government and donors and the 5 Million Hectare Reforestation Program (5MHRP). The FSDP is a two-pronged project with two main focuses: (i) production forest plantation development in four provinces of central Vietnam: Thua Thien Hue, Quang Nam, Quang Ngai and Binh Dinh, and (ii) conservation fund. It is expected to support smallholders the establishment of some 66,000 ha of commercial forests. The total project fund values at 22.6 million SDR. The project development objectives are: 1) strengthening forest management and biodiversity conservation, through the revision of selected policies, and regulations regarding the management of production plantation forest, and special forests uses . In addition, farm forestry groups will be established to develop smallholder forestry, and the promotion of forest plantation certification to ensure environmental sustainability, higher prices, and improved and secured market access for participating households. 2) based on different cropping systems, forest plantations will be established. A participatory approach will involve village consultations, and technical and environmental screening of proposed sites, including land allocation, and certification for land uses rights. Extension and services delivery shall assist smallholders in forestry plantation activities, plantation design and management, and, plantation investments in the form of credits; 3) conservation, and sustainable use of biodiversity resources; and, 4) project management activities will include the coordination of project implementation with the various government agencies at central, provincial and district levels, monitoring, and cooperation with partnerships.

By the end of 2007, together with credit and procurement activities, training courses on Credit Manual to VBSP staffs, borrowers and partners were held at 4 project provinces. The training workshops are conducted annually to improve the implementation effectiveness and efficiency and deal with difficulties and shortcomings. 

The Rural Income Diversification Project in Tuyen Quang province

The Government of Vietnam and the International Fund for Agricultural Development (IFAD) signed an agreement to implement the project “The Rural Income Diversification Project in Tuyen Quang province” (RIDP). The Ministry of Finance – on Vietnamese side signed a sub-agreement with VBSP to give  a sub-loan of USD 1.43 million . The project aims at the socio-economic development of project target groups, who are the poor and small-scale business households, suppliers of seedings and agriculture materials at Region II and III in project area. It is expected to strengthen their capacity and participation in decision making, strengthen the foods security, diversify the income sources in project area and encourage environment sustainability growth. New lending methodology of whole sale is employed under the project: VBSP gives direct lending to Credit and Savings Groups and the Group onlends to their members and VBSP does not pay commission to the Group as usual. This lending method is piloted and proved effective and efficient,  the loan management of the Group is improved significantly. In 2007, VBSP has made loan disbursement and loan supervision smoothly.

Lending programme for small and medium enterprises (KfW project)

Ministry of Finance lends to VBSP an amount equaling to EUR 7 million  from German Government source which is funded through German Reconstruction Bank (KfW) to set up a credit revolving fund to provide loans to small and medium enterprises (SMEs) in project areas. By the end of 2007, VBSP has released 449 loans to small and medium enterprises for business development and job creation. The project achievements in phase I are recognized by the donor and Government, and the donor has supplemented the second loan of EUR 3.5 million in phase II. Through the project, the target groups of VBSP are extended.

“Fund for the rural poor” project (OPEC project)

“Fund for the rural poor” project is funded by the OPEC Fund for International Development with an amount of USD 10 million. The project aimed at two key objectives: (i) supporting the poverty reduction credit program in Vietnam for strengthening socio- economic position of the rural poor in 20 provinces with special attention to remote, mountainous areas in the Northern and Central Highlands of Vietnam; and (ii) Reinforcing and strengthening capacity of Vietnam Bank for the Poor (now is the Vietnam Bank for Social Policies) in supplying the poor with financial services. In 2007, the project continues the effective and efficient lending to project beneficiaries.

Participatory Resources Management Project in Tuyen Quang province (PRMP)

The International Fund for Agricultural Development (IFAD) lends the Government of Vietnam an amount of USD 3,724,000 through the Participatory Resources Management Project in Tuyen Quang province (PRMP). After 15 years of implementation, the project is recognized to contribute to improving income and living standards of people in the project area, especially those who are the poor, in ethnic communities and have limited access to banking services. In 2007, the project continued its lending from the revolving fund. The loan disbursement, principal and interest collection are made effectively and efficiently.  

The Forestation and Sustainable Forestry Project (KfW6 project)

KfW6 project performs the forestation and sustainable forestry management of 32,700 ha of natural forests in Quang Nam, Quang Ngai, Binh Dinh and Phu Yen under the finance agreement signed between KfW and the Socialist Republic of Vietnam. Accordingly VBSP opens deposit accounts for farming households and rural communities in KfW6 project areas. Each project beneficiaries receives  grants through the accounts opened at VBSP district offices. The total grant values at EUR 3.712.710. In June 2007, project staff at branches attended the training course on deployment of database administration software for better project management. The loan disbursement, loan supervision and management are run smoothly.

Strengthening Savings Services to the poor financed by Ford Foundation

It is expected to design the new savings service and make pilot practice before nationwide spread. With the focus on sustainable poverty alleviation, after two years of implementation, VBSP will design newly-issued savings products and services for best and sustainable response to the demand of the poor and low-income households in project area (Hoa Binh, Hai Phong and Gia Lai) before the nationwide spread. The output savings products and services are expected to play an important role in sustainable poverty alleviation for the poor and low income households and protect them from falling into poverty again. In 2007, VBSP held the launching workshop and has conducted a survey in the project areas to make the evaluation on current demand and supplies in savings services for the poor. This report is the basis for VBSP in designing appropriate savings products and services for the poor in order to start the program in the project areas. The project also include making home made software for savings transaction in laptops to provide savings service for the poor at communal level.

The Technical Assistance Project of PRI - NLFC

The Technical Assistance Project to VBSP funded by the  Policy Research Institution (RPI) of Japan Ministry of Finance and implemented by the National Life Finance Cooperation (NLFC). The Japanese side, through PRI and NLFC, presented to VBSP officers (including headquarters executives, key officers at headquarters, branch and district levels) their knowledge, expertise and experiences regarding the credit analysis on providing loans to small-scale enterprises, newly-established enterprises, education loan as well as their experiences in loan management, branch management, helping VBSP formulate three credit analysis materials and train transaction office managers to become “trainers” on utilization of the credit analysis materials  through a series of seminars conducted both in Japan and Vietnam. 

In 2007, VBSP sent a delegation to Japan for experiences and skills sharing with NLFC. The training methodology is the combination of theory, case study and field visit in Tokyo, Sapporo and OTa. After the study visit, VBSP staff have collected many experiences and skills in loan management, project appraisal and lending to newly-established enterprises. By the end of 2007, VBSP and NLFC held 3 workshops in Hanoi (the North), Da Nang (the Central) and Ho Chi Minh City (the South) on loan management and project appraisal for VBSP staff in the whole network, participated by representatives of VBSP branches and run by experts from NLFC. The project has the immediate impact on VBSP lending programmes, especially for lending programme for small and medium enterprises development (KfW project), job creation and production households in disadvantaged areas.

In the year, the Japanese side coordinated with VBSP to conduct the mid-term and final evaluations.

The Project of Building VBSP’s capacity beyond WTO integration (WTO Programme)

Upon the Agreement on Programme for Technical Assistance beyond WTO integration among the Government of Vietnam, the UK Department for International Development (DFID), The Australian Government's overseas aid program (AusAID), pursuant to the Decision by the Steering Committee of the Technical Assistance Program “Maintaining economic growth for the poor and protecting poverty elimination achievement after WTO entrance”, VBSP is financed to implement “The project of building VBSP’s capacity beyond WTO integration” including two key components: (i) Support VBSP to formulate the long-term strategy; and (ii) Improve VBSP staff’s knowledge about WTO and  impacts of WTO integration on the poor. In 2007, VBSP sent three delegations to Indonesia, Bangladesh andPhilippines for experiences and information collection. These study visits support VBSP to formulate the long-term strategy (to find out the roadmap for credit and financial services delivery to the poor and other policy beneficiaries). In the year, VBSP also held three training workshops in the Central, the South and the North for improving the knowledge of VBSP’s staff about WTO and the impact of WTO entrance on the poor. In this way, it is expected to effectively and efficiently implement the National Programme for Poverty Reduction, Job Creation, Rural and Agricultural development beyond WTO integration.

USAID-STAR-KENAN ASIA technical assistance project

The Project “Technical Assistance Program for the Vietnam Bank for Social Policies” is an  initial component of a multi-phase plan, to provide technical assistance to the Vietnam Bank for Social Policies (VBSP), to be implemented by Kenan Institute Asia with facilitation by USAID funded program of Support for Trade Acceleration (STAR) .

The project will provide technical assistance in the form of capacity building training in microfinance and information technology (IT) – with a particular focus on building a core training team for VBSP and preparing VBSP to receive future capacity building assistance

The first stage of the project was completed in October 2007, including two microfinance training courses for 10 VBSP staff at Head Office, who become the trainers of VBSP to disseminate trained knowledge. At the same time, Kenan also sent IT experts to VBSP to assist VBSP in reviewing its IT modernization project.

Global Micro Entrepreneurs Award

On 14 December 2007, 15 VBSP borrowers received Micro Entrepreneurs Award funded by Citigroup. This award was first introduced in 2001. So far the award has been successful held in 23 countries around the World, participated by more than 500 microfinance institutions with 4,000 proposals submitted and 240 awards handed.