International relation activities in 2008

VBSP position in international relations is continuously improved on the viewpoint of international organizations and Vietnam’s Government agencies. This can be seen through the fact that VBSP was invited to participate the International Donors Conference in Hanoi (May 2008); is remarked with good performance in the report prepared by WB at the Consulting Group Meeting (December 2008).

As the member of Banking With the Poor Network (BWTP), VBSP played role in holding the Asia Microfinance Conference in Hanoi (26-29 August 2008), which was participated by more than 500 representatives the world round. At the conference, it is said that VBSP not only works as an effective and efficient tool of Vietnam’s Government to realize its policies and directions, but actively, creatively and soundly integrates with the international community as well.

As the member of Asia Pacific Rural Agriculture and Credit Association (APRACA), VBSP constructively took part in APRACA activities at the annual meeting in Hanoi (March 2008) and at the EXCOM and the relevant events in Russia (November 2008).

For capacity strengthening, VBSP sent its staff to China, Thailand, Taiwan, Philippines, India for study tours, to Australia to attend “AusAID Australian Leadership Fellowship Program” and to America to attend “Develop a microfinance bank” training courses.

VBSP also received many international delegations for sharing experiences and expertise and exploring potential cooperation in the coming time.

PROJECT MANAGEMENT

I – Processing Project

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.

In January 2008, a study tour to China to get forestation experiences was held. It was a good opportunity for the project partners to learn experiences and to practice them in project implementation appropriately. The summing-up meeting of 2007 implementation was held in 2008 to review the project, discuss necessary adjustments to release difficulties for better performance and achieve the project’s targets. The project management unit worked with consultants to finalize output 1: Revised Credit Manual; output 2: Report on Assessment of training courses by VBSP; output 3: Report on current MIS and statistical report; output 4: Design Credit Schemes for State Forest Enterprises; output 5: Recommendation on interest rate structure. The disbursement, supervision and management and project review are made to be happened regularly, effectively and efficiently.

  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 seedlings 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 to be effective and efficient, the loan management of the Group is improved significantly. In 2008, VBSP continues transferring money to implement the project. As of 31 December 2008, the total outstanding loan reached above 37 billion dongs.

Lending programme for small and medium enterprises (KfW project)

Ministry of Finance lends 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 2008, VBSP has delivered 449 loans to small and medium enterprises to develop business and create more jobs.

“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. Vietnam Government on-lends VBSP to implement the project and give lending to project target groups. In 2008, the project continues the effective and efficient lending and loan management.

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 2008, the disbursement, loan and interest collection are performed smoothly. Good credit management is acknowledged.

The Forestation and Sustainable Forestry Project (KfW6 project)

KfW6 project performs the forestation and sustainable forestry management 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. The project aims to support the forestation and sustainable forestry management of 32,700 ha of natural forests Each project beneficiaries receives  grants through the accounts opened at VBSP district offices. The total grant values at EUR 3.712.710. In 2008, the project effectively and efficiently disburses, manages and supervises the lending.

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 2008, PMU developed the training materials and held the training workshops in Hoa Binh, Hai Phong and Gia Lai. The information and knowledge collected from training is expected to help the participants to perfectly implement the project for the goal of successful pilot model before nationwide duplication. At the training workshops, the project staff have a chance to share the experiences, ideas and solutions to the problems for better project implementation. The leaflets are produced not only for advertising the project but also for improving people’s awareness of savings and understanding of effective savings. Regarding IT component, VBSP IT Center perfected the software for savings transaction management in the way to save costs and ensure effective performance. The supervision is carried out regularly by VBSP and Ford Foundation.

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 2008, the project was under the process to finalize the development strategy; develop the propaganda manual on the impact of WTO membership to the vulnerable groups in the society in general and to VBSP in particular. In this way, VBSP staff’s awareness of the challenges to VBSP beyond WTO entrance is improved.

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 the year, the final evaluation report of 2003-2008 implementation was produced. In the report, NLFC acknowledges the success of the project and the goals achieved.

1. New project

In 2008 only, 05 new project agreements are signed to implement:

Project “Improving the awareness of the poor on policy lending by VBSP beyond WTO entrance and strengthening the social supervision on policy lending through telecommunications”

In April 2008, VBSP and the Steering Committee of the Technical Assistance Programme signed an agreement to implement the project “Improving the awareness of the poor on policy lending by VBSP beyond WTO entrance and strengthening the social supervision on policy lending through telecommunication” valued at 180,000 USD. During project implementation, VBSP had selected High Technical Television-HTA, Vietnam Television (VTV) and Digital Technology Television (VTC) to produce television programmes on VBSP. 09 video clips on VBSP key lending programmes, namely the lending programme to the poor, the lending programme to the disadvantaged students, the lending programme for safe water and environment sanitation were televised on VTV1 channel, VTC1 channel. In this way, VBSP is introduced nationwide and had attracted the attention of many people.

The technical assistant project funded by Ford Foundation

In July 2008, VBSP and Ford Foundation signed an agreement to implement the project “Strengthening capacity of the Vietnam Bank for Social Policies’ through improving skills of district branch management, piloting a new overseas remittance service in rural communes and testing the Progressive Poverty Index as a targeting and evaluation tool” (Project Ford II in short) valued at 252,000 USD. After two years of training, it is expected to improve the management skills of all management board of district transaction offices in the whole network to ensure the best performance at grassroots level.  The management skills practiced will have good impact on the staff and its partners and shape a new management style for VBSP. For the overseas remittance service, it is expected to strengthen the access of customers in rural areas  to overseas remittance service through the pilot implementation at a province characterized with the great number of overseas workers and the geographic and topographic diversity. Besides lending service and savings service, the overseas remittance service shall improve VBSP operation in particular and poverty alleviation process in Vietnam in general. After two years of implementation, VBSP will become an agent of Western Union-the provider of remittance service and the success pilot model at Thanh Hoa province will be duplicated nationwide. After testing the Progress out of Poverty Index of VBSP, there has not been any individual and institutional research on effective and comprehensive Progressive Poverty Index for Vietnam’s Government policy credit and progress out of poverty. For this reason, the project targets to “Evaluate the impact of policy lending of VBSP by Progressive Poverty Index. In 2008, the proposal of overseas remittance service of Western Union had been drafted and some preparing activities had happened.

The Housing Facility Credit Loan Agreement (loan from ADB)

In July 2008, the International Credit Project Management Unit of State Bank of Vietnam and VBSP signed the Housing Facility Credit Loan Agreement (loan from ADB) of Phase I valued at 48 billion dongs. The Project Management Unit had drafted the Credit Manual and the Accounting Manual and has participated in the process to finalize the operation mechanism of the project.  

Safe House Loans in Central Cost

In November 2008, VBSP successfully negotiated with the Development Workshop of France to sign an agreement with Thua Thien Hue branch on loans for safe housing package, phase I valued at 187,500 USD. Natural disasters are recognized as big challenges to the vulnerable groups in Vietnam and cause more serious poverty situation. The project targets to establish a sustainable and affordable loan package to enable poor families to achieve safe flood and storm resistant housing.

The technical project with Viettel Corporation

In December 2008, VBSP and Viettel-Media- Viettel Corporation (Viettel) signed an agreement to provide the credit information on mobile network (Microsoft-based method). Accordingly, VBSP and Viettel commit to the long-term cooperation to explore potential collaboration on appropriate products and services. VBSP has a long-term strategy to deploy more and more information technology in its activities, deploy the digital technology and telecommunications to develop new products and services (with the support of mobile phone and telephone infrastructure, internet connection).