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International Relation

Updated: 2016-08-03 11:07:22

International relation activities in 2010



International Relations

 To effectuate the directions and policies of VBSP’s management in mobilizing all sources in the society for poverty alleviation, international relations activities are enhanced to explore fruitful sources for policy lending and technical assistance for training, information and communication, capacity strengthening for VBSP’s partners in microfinance activities. 

VBSP has attained steady and fast development after its official operation in 2003. The achievements of VBSP are recorded thanks to many lessons and experience learned from other microfinance institutions all over the world. Consequently VBSP has increasingly met the demand of the poor and other policy beneficiaries. Overseas study tour programs and international conferences and forums are acknowledged by VBSP as an effective and efficient way to introduce VBSP’s operation. Therefore under the agenda of APRACA, VBSP sent a delegation to joint the 17th General Assembly meeting and forum on policy of risk management in Uzbekistan, which presented fruitful and successful lessons and experiences on risk management of institutions participated. Additionally one representative of VBSP was delegated to participate in Asia Microfinance Conference in Colombo, SriLanca in the year.  

Besides acquiring lessons and experiences from international organizations, VBSP always welcomes international organizations visiting the bank to study its experiences in poverty alleviation based upon its contribution and success in microfinance in Vietnam. VBSP received two delegations from Bangladesh in 2009 and upon the success of these two study programs, another 14-member Bangladeshdelegation again entrusted VBSP to conduct the study program on microfinance inVietnam in 2010. During the study visit, the delegation had better understanding on VBSP’s operation and its contribution in microfinance in Vietnam, paid visit to some successful models of cultivation, husbandry and fishery etc,. Besides, VBSP had chance to welcome a 7- member delegation of the Policy Bank of Lao PDR (Nayoby Bank) leaded by the General Director of Nayoby Bank to share VBSP’s practice in microfinance in poverty alleviation in Vietnam.  The study program was successfully resulted in a Memory of Understanding (MOU) on training support, human resource exchange, experiences in policy lending to the poor and other policy beneficiaries etc,. which gradually asserted the status of VBSP in the international playground of microfinance.

During the year, VBSP also had the chance to welcome and work with different delegations from different countries and organizations to introduce its operation and grasp cooperation opportunities, such as: consultants team from Asia Development Bank (ADB) for discussion to design the loan for microfinance sector development; monitoring and evaluation team from the World Bank – the project for forestry sector development to discuss the following issues: suggestions for manual correction, risk management, approach to access insurance services for fishery, project expansion etc,.; ADB mission to discuss the draft for evaluation report on microfinance and key points in the strategy for microfinance development under the technical assistance project for microfinance development in Vietnam; Chemonics International Organization to explore the potential cooperation in providing financial services to detoxified groups and people living with HIV in order to diversify the traditional target groups of VBSP; Pathfinder International Organization to develop the cooperation in risk management; the donors from Denmark, Australia and England to design the proposal for subsidies funding for capital mobilization for the lending program for safe water and rural environment sanitation; Bill & Melinda Gates Foundation (WB) for technical assistance etc,. Those meetings and working visits have become a precondition for VBSP to grasp opportunities in the coming years.

Project Management

Projects for microfinance lending funded by international donors are appreciated in diversifying not only VBSP’s target groups but also its products and services.  In addition, technical assistance projects have played another role not only in strengthening VBSP’s operation, capacity of VBSP’s staff but also in specially supporting VBSP’s partners at local (Management Board of Credit and Savings Groups, mass organizations etc,.), enhancing training and communication for VBSP’s target groups.

  1. 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 five 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) Natural Conservation Fund. It is expected to support smallholders the establishment of some 66,000 ha of commercial forest. The FSDP consists of four components: Institutional Development; Production Forest Plantation; Conservation Funds; and, Project Management, monitoring and Evaluation. Of these 4 components, VBSP is responsible for the third one - Production Forest Plantation.

It substantially provides commercial forestation loans ( for Production Forest Plantation) with preferential interest rates in project areas as well as workshops, consulting and training services.

In 2010, the project disbursed loans to additional number of 4,850 borrowers of the total 12,895 active ones with the total outstanding loans of VND 274 billion.      

  1. The Rural Income Diversification Project in Tuyen Quang province

The Rural Income Diversification Project in Tuyen Quang province (RIDP) is implemented under an agreement between the Socialist Republic of Vietnam and the International Fund for Agricultural Development (IFAD). The Ministry of Finance (MOF), on  behalf of Vietnamese Government, signed a sub-agreement with VBSP to give a sub-loan of SDR 1,12 million (equivalent to USD 1,43 million) with the lending rate of 0,75% per year and lending term of 19 years. 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 food security, diversify the income sources in project area and encourage environment sustainability growth. New lending methodology of wholesale is employed under the project: VBSP provides direct loans to credit and savings groups and the groups then give loans to their members. This new lending method piloted by VBSP has brought about remarkable results, the Groups’ loan management has significantly been improved.

By the end of 2010, the total outstanding loans reached over VND 36 billion with 2,454 active borrowers.

  1. Lending program for small and medium enterprises (KfW project)

Within the Small and Medium Enterprises Development Programme’s framework, VBSP was allowed by the Prime Minister to take out a loan under Document No. 225/TTg-QHQT dated March 7th 2005 and Document No. 380/TTg-QHQT datedApril 7th 2005. On that basis, the Ministry of Finance (MOF) lent VBSP an amount equaling to EUR 7 million from the German Government source, which is funded through the German Reconstruction Bank (KfW) in 20 years with 5 years’ grace and 0.75% interest rate and 0.25% commitment fees.

The project aims at setting up a credit revolving fund to provide loans to small and medium enterprises (SMEs) in 15 project areas: VBSP’s transaction center, Hanoi, Ho Chi Minh city, Hai Phong, Ha Tay (now has been merged with Hanoi), Bac Ninh, Hung Yen, Dien Bien, Ha Tinh, Da Nang, Gia Lai, Long An, Son La, Quang Binh and Binh Duong. Besides the sources of the fund is recognized as mobilized funds at preferential interest rate so that reduce the subsidy from the State Budget for interest rate difference.

The successful implementation of project in phase I is a strongly persuasive precondition for receiving additional fund of 3 million Euro in phase II to expand project areas in Dong Nai, Quang Ninh, Bac Giang, Hoa Binh, Khanh Hoa, Nam Dinh and Ho Chi Minh city since 2009.

As of 31st December 2010, the total outstanding loans numbered VND 211 billion, which helped to create jobs and enhance business expansion for 193 SMEs.

  1. “Fund for rural poor” project (OPEC)

“Fund for rural poor” Project is granted by the OPEC Fund for the Vietnamese Government with an amount of USD 10 million. The Government lends this entire amount from OPEC Fund to VBSP and the bank then on-lends to project beneficiaries. 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 the Vietnam Bank for the Poor (now is the Vietnam Bank for Social Policies - VBSP) in supplying the poor with financial services.

By the end of 2010, the total outstanding loans of the wholesale lending reached nearly VND 29 billion through 874 credit and savings groups, who have provided direct lending to 3,544 active borrowers in 343 communes of 75 project districts. 

In general, through the activities of nearly 1,000 credit and savings groups, the project has gradually improved the group members’ awareness, strengthened relationships between villagers and significantly reduced many social evils. It also provides members of the groups with a chance to share business and production experiences.

  1. Participatory Resources Management Project in Tuyen Quang province (PRMP)

The International Fund for Agricultural Development (IFAD) lends the Government of Vietnam (GoV) an amount of USD 3,724,000 through the Participatory Resources Management Project in Tuyen Quang province (PRMP). With the consent of the GoV and MoF, the project has been launched from April 1994 by the Vietnam Bank for the Poor (now is the Vietnam Bank for Social Policies – VBSP). The project beneficiaries are poor households in 145 communes of 5 project districts: Na Hang, Chiem Hoa, Yen Son, Son Duong and Ham Yen. VBSP has provided lending to project beneficiaries under its prevailing regulations but the interest rate is the commercial one. They are individual farmers, female workers in cottage and light industry, cooperatives, non-formal groups as well as other state-owned enterprises. 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 2010, the  loan disbursement, principal and interest collection and fund revolving continued to be performed effectively and efficiently and good credit management is acknowledged. As of 31 December 2010, the project attained the outstanding loans of nearly VND 49 billion, with more than 6,000 active borrowers. 

  1. 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 financial agreement signed between the German Reconstruction Bank (KfW) and the Socialist Republic of Vietnam. The project is implemented under  the management of the Ministry of Agriculture and Rural Development and the Management Board for Forestry Projects. It aims to support the forestation and sustainable forestry management of 32,700 hectare of natural forests in 4 project provinces. Each project beneficiary receives grants through the deposit accounts opened at VBSP district offices. The total grant value for KfW6 project’s components is EUR 3,712.710.

Under the contract with the Management Board for Forestry Projects, VBSP takes charge in opening and managing deposit accounts for farming households and rural communities in the project areas, which will be implemented in each approved phase after the bank receives money from project budgets. Money in the account will enjoy the highest commercial interest rate prevailing in the project areas. VBSP also does its best to guarantee the withdrawal progress of the project and provides most favorable conditions for those involved in the project so that they can perform forestry regeneration upon appropriate technical procedures.

In 2010, VBSP had successfully opened and managed over 2,665 accounts with total value of VND 15 billion for beneficiaries of the project, helped 2,665 households receive timely and sufficient money for forestry regeneration and protection.

  1. UNILEVER Project

The project “Improving livelihoods for poor women through the microfinance service” (hereinafter referred to as Unilever Project) is piloted under the agreement among the Vietnam’s Women Union, the Vietnam Bank for Social Policies and Unilever Fund in Vietnam on credit delivery for poor households through semi-formal microfinance institutions set up by Women Union of Vietnam. It is piloted from 2008 until the end of 2010 in 04 provinces: Lao Cai, Ninh Binh, Quang Ninh and Ben Tre. The main objective of the Unilever project is to improve the living standard of women and their families by raising awareness and providing preferential credit for poor and near-poor women.

Besides, the project is also considered as an experiment of the collaboration model between VBSP as a formal microfinance institution and WU as a semi-formal one. 

Within the project framework, VBSP shall provide technical assistance for the Vietnam’s Women Union to perform the project effectively through designing the project’s credit and savings mechanism; opening training and retraining courses for the project personnel as well as providing accounting software for Project Management Units (PMUs) at communes.

In 2010, the technical assistance to WU at all levels and Project Management Units (PMUs) at communes was performed by VBSP through the following activities: (i) Piloting the software for commune transaction; and (ii) Handing over the sources received from Unilever to WU. At the date of handing over (31 December 2010), the project ultimately achieved the project targets with over VND 2 billion outstanding loans.

When UNILEVER Fund selected VBSP as technical support partner in 4 project princes, VBSP has gradually affirmed its role and position as the biggest professional microfinance organization in Vietnam currently, who is always trusted by foreign donors in launching credit and technical support projects for the poor and other beneficiaries.

  1. Project Ford II - "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”

The project objectives are to improve the management skills of all management staff of district transaction offices, to develop new service and study quick and effective evaluation methods of credit operation to ensure the best performance for VBSP. The project has three components: (i) Training directors or deputy directors of district transaction offices in terms of necessary managerial skills for branch management; (ii) Piloting a new overseas remittance service at commune; and (iii)Researching and evaluating impact of poverty reduction from VBSP’s credit operation.

As of 31st December 2010, the achievements of 03 components are as follows:

Component I:

In 2010, PMU and TOT team have finalized the training documents and printed the training materials. The training qualification was improved noticeably when training materials, method of training, administrative arrangement and learner evaluation were improved based upon the practice in 2009. As of 31st December 2010, VBSP held 26 training courses for 780 participants, completing the training program for directors and deputy directors of all district transaction offices on management skills and microfinance.

All the introduced contents are highly spoken to be essential to the management at branches. Participants almost confirmed the practice of lessons and experiences in the training in their management at branches. Besides, the trainers have long-time management experiences, teaching and presentation skills and particularly training for several various projects, bringing about attracting enthusiasm and energy of trainees.

Component II:

Under the sub-agent agreement on project implementation signed by VBSP and Bank for Investment and Development of Vietnam (BIDV) in September 2009, VBSP closely had worked with BIDV to effectuate the Western Union sub-agent performance. In addition, VBSP and BIDV jointly held the training course on overseas remittance transfer service for representatives of mass organizations at district and commune levels, some members of savings and credit groups who are beneficiaries of the lending program for overseas workers for defined term. After the training, all participants are responsible to make communication on received information to other members in the area. The training courses participated by 34 people per course were held in 26 project districts/towns in Thanh Hoa province.

As of 31st December 2010, 10 districts of total 26 project districts reportedly performed the overseas remittance transfer transaction.

Component III:

By using the progressive poverty index (PPI), Researching and evaluating impact of poverty reduction from VBSP’s credit operation, VBSP at the first time has evaluated its access to the poor and quality of policy lending through the poverty rate on the basis of loan term at VBSP. This method improves rapid evaluation of poverty reduction by VBSP need to be perfected and put into the management information system of micro borrowers for annual report supervision.

  1. Project Ford III - Strengthening Savings Services to the poor financed by Ford Foundation

The pilot performance of project Ford I “Piloting new savings products for low income customers” helps VBSP formulate, test and complete the regulation on savings mobilization in the poor community in a sustainable manner, bringing about actual meanings and gradually create the savings habit for the poor, contributing sustainably to the poverty reduction program. The successful model of savings for the poor is acknowledged as a very important basis for VBSP management to scale-up the pilot savings products for the poor nationwide.

Project Ford III “Strengthening Savings Services to the poor” supported transaction offices tools for survey, evaluation and classification of SCGs, forming the basis of consolidating and improving capacity and operation effectiveness of SCGs. It helped to develop the communication possibility, facilitating clientele to access to general knowledge and understanding on savings service through various communication media, telling over and over for keeping sustainable and effective memory and understanding, contributing to successfully VBSP’s implementing the new savings in the whole country.

One of the prioritized communication activity performed in 2010 is the communication of new savings service to the poor of VBSP on local television (at provincial/municipal level).  This communication approach is considered the most effective and efficient with pictures and sounds impact, which easily reach and stay in people’s mind, especially for VBSP target groups. The appreciate selected channel and time for broadcasting video clips also played a significant role in reaching the targeted audience and ensuring comprehensive impact. 

  1. The technical cooperation project with Japanese partners in phase III "Strengthening the capacity of internal training system for VBSP"

Right after finishing six years of successful and fruitful conduction of the technical assistance project between VBSP and Policy Research Institute – Japanese Ministry of Finance in 2003 - 2008, the Japan side continues cooperation with VBSP on capacity building in the internal training system. The objective of this technical cooperation project is to instruct in developing training materials and training trainers (about 20 lecturers) toward the newly establishment of internal training courses on credit analysis methods for small businesses in the VBSP. In the framework of phase III, subsequent to the first workshop held on November 2009, VBSP and NLFC jointly held two training and evaluation workshops in Hanoi in 2010. After the workshops, VBSP in collaboration with NLFC had amended the training materials for TOT training, perfected the experiences and skills in training and supplemented some case studies in training documents and drafted the outline for 3-day training of credit appraisal for staff of VBSP branches since November 2010.  

The last, but not least, the project is expected to be implemented based on VBSP’s self-supporting efforts so that the bank can build its own training capacities by itself only after the end of this project.

  1. Coastal wet land development project (CWDP)

The revolving fund belongs to the social assistance fund under the project of protection and development of south coastal wet land (hereinafter CWPD) implemented in line with MoF Agreement No.3292 on 12 November 2004 between MoF and VBSP. Total capitals of credit program: MoF approved to transfer to VBSP less than 5,200,000 DKK as part of DANIDA grant from the component of social assistance fund (equivalent to 650,000 USD).

The project objectives are to provide credit for the poor households in project area for income generation such as: planting, animal husbandry, small scale industry and small business that must be appropriate with the general target of wet forest protection.

The project scope includes 21 communes of 12 districts in 04 provinces: Tra Vinh, Soc Trang, Bac Lieu  and Ca Mau. As of 31st December 2010, the total outstanding loans is VND 5.216 million with 1,676 active borrowers.



Poor Households

Lending to poor households 6,6%/year
Lending to poor households in 64 poor districts as stipulated by the Government Resolution No.30a in 2008 3,3%/year

Near Poor Households

Lending to near poor households 7,92%/year


Lending to disadvantaged students 6,6%/year

People in need of loans for job creation

Lending to business establishments owned by war invalids and handicapped persons 3,3%/year


Term Deposit Rate
Overnight 3,04%/year
1 week 3,23%/year
2 week 3,5%/year