Policy credit as driving force for local economic development

Thanks to the State’s preferential credit funds implemented through the Vietnam Bank for Social Policies (VBSP), a large number of impoverished residents - from the high mountain areas to the coastal flats of the narrow strip of Quang Binh Province - have been provided with crucial resources to invest in economic development and achieve sustainable poverty alleviation.

Quick disbursement at commune transaction points in Quang Binh Province

The road to Minh Hoa District, located in the north-west of Quang Binh and bordering Laos, was once remote and difficult to access, but has become much more accessible. Although the road is not particularly wide, it is smoothly paved and bustling with traffic, dispelling the desolate feeling often associated with forested regions.

Nearly two decades ago, across the district’s 1,400 square kilometres, there were only 20 kilometres of bumpy, gravelled road, with the remainder consisting of muddy dirt tracks. With poor infrastructure and limited arable land, the approximately 50,000 residents - comprising Kinh, Ba Na, Van Kieu and Chut ethnic groups, among others - lived in deprivation.

Faced with this situation, leaders at various levels were determined to find pathways to lift Minh Hoa’s people out of poverty. Through sustainable poverty reduction programmes, rural development initiatives, and particularly the flow of policy credit capital, the land and people of Minh Hoa were allowed to thrive. In Do–Ta Vong Village, part of Trong Hoa Commune, home primarily to the Bru–Van Kieu, Khua, and May ethnic groups, residents previously relied heavily on monthly state support. Recently, however, many households have taken out policy credit loans via the district branch of the Vietnam Bank for Social Policies to develop livestock farming and cultivate hybrid acacia and melaleuca trees.

Recognising that policy credit capital, facilitated through VBSP, offers low and stable interest rates with long repayment terms, the poverty reduction steering committees, local authorities, and Party committees of Trong Hoa actively established Savings and Credit Groups under the management of the Farmers’ Union.

Upon receiving additional allocated funds, the Savings and Credit Groups, alongside village heads, organise public, democratic meetings to transparently select eligible borrowers, ensuring that villagers’ needs are fairly met.

Of 86 households in the village, 40 have received loans totalling over 1.4 billion VND from VBSP, accounting for 46.5% of households. Most borrowers have utilised the funds effectively, showing strong awareness in managing their loans and fulfilling their repayment obligations to the State, with no overdue debts recorded.

Many households have boldly taken out policy loans to expand production and achieve sustainable poverty reduction

Along Quang Binh’s coast, four particularly disadvantaged communes - Phu Hoa, Lien Trach, Ngu Thuy Bac, and Ngu Thuy - have been benefiting from national sustainable poverty reduction programmes, including numerous policy credit schemes directly supporting poor, near-poor, and newly non-poor households.

Meanwhile, in Lien Trach Commune (Bo Trach District), a locality regularly battered by natural disasters and floods, efforts to achieve sustainable multidimensional poverty reduction have focused on forest planting, care, protection, and stable livelihoods, providing jobs for hundreds of local workers.

Around 400 local workers are employed overseas, bringing substantial income to their families. Each year, 30–40 individuals utilise policy credit loans to fund their work placements in the Republic of Korea, Japan, Taiwan (China), and other countries.

Policy credit loans have been invested properly, reaching the right beneficiaries and being used effectively, contributing significantly to Quang Binh’s poverty reduction efforts.

Between late 2019 and March 2025, policy credit has helped over 9,237 poor households, 12,975 near-poor households, and 18,659 newly non-poor households access loans for production and business; created jobs for over 37,000 workers; provided loans for 2,900 students to pursue their studies; supported the construction of over 141,000 clean water and sanitation projects in rural areas; financed the building of more than 2,400 houses for poor and policy beneficiary households; and assisted 263 former prisoners in securing loans for reintegration into society.

As a result, Quang Binh’s poverty rate fell from 6.98% (in 2019) to 3.13% (in 2024). Tran Phong, Chairman of the Quang Binh Provincial People’s Committee, affirmed that this achievement was the result of concerted efforts across the political system, with VBSP playing an important and highly effective role.

Tran Van Tai, Director of the VBSP’s branch in Quang Binh, stated that over 22 years of operation, the branch’s total capital has grown from an initial modest amount of 200 billion VND to nearly 5,769 billion VND, an increase of almost 30 times compared to its founding. Of this, entrusted capital from the local government budget stands at 294.6 billion VND, up by 238.9 billion VND since 2019.

Over the past five years, the bank has implemented 21 credit programmes, achieving a loan turnover of 8,419 billion VND and serving 162,000 borrowers.

Information about policy credit programmes is publicly posted at commune-level transaction points

In parallel with mobilising capital, the branch has successfully developed a specialised organisational model and credit management mechanism suited to local conditions. Policy lending activities are closely coordinated among four key stakeholders: the Bank, local authorities, mass organisations, and Savings and Credit Groups, working together to support local people. Mass organisations manage 5,691 billion VND, accounting for 99.9% of the total outstanding policy credit debt.

In recent years, VBSP Quang Binh has also actively promoted the emulation movement “The whole country joins hands for the poor – no one left behind.”

Specifically, the branch has concentrated resources, both human and financial, to effectively implement policy credit programmes, striving to meet 100% of the loan demand from poor households and other policy beneficiaries who qualify for funding.

In addition, in response to the emulation campaign “Joining hands to eliminate temporary and dilapidated houses nationwide by” 2025," launched by the Prime Minister and the Quang Binh Provincial People’s Committee, the branch has provided 95 million VND in financial support to help nine disadvantaged poor households repair or replace substandard housing.

Tuan Ngoc – Dong Du