Press Release: Social security policies - Role of National Assembly

To inform voters and readers on roles of policy credit, rights and responsibilities of relating parties and methods of implementation, to receive recommendations and comments on construction, adjustment and surveillance of implementing social welfare policies, on March 2016, VBSP cooperates with People Representative Newspaper to organize an online conversation under the theme "Social Security Policy - The role of the National Assembly".

Managers of People Representative Newspaper with guest speakers

The online conversation provided more sufficient information on directions and policies of the Party, the State on policy credit and relevant legal documents; mechanisms and procedures of the credit programs being implemented VBSP. Simultaneously, it was the chance for people to participate in surveillance over VBSP’s activities.

Guest speakers of the conversation are congresspersons, Mr. Do Manh Hung - Deputy Chairperson of the Committee on Social Affairs of the National Assembly; Ms. Hoang Thi Hoa - Member of the Standing Committee on Culture, Education, Youth and Children's of the National Assembly; Ms. Khuc Thi Duyen, Chairperson of the Thai Binh Provincial Women’s Union; and Deputy General Director of VBSP – Mr. Vo Minh Hiep.

The followings are contents exchanged online:

Vu Anh Minh from Hanoi asked: Many people believe that ethnic minorities living in hard conditions because of lacking knowledge on business and production as well as facing difficulties in accessing loans for production development. From practical supervision, what is your point of view?

 Congressperson Do Manh Hung joined the online conversation

Congressperson Do Manh Hung: Yes, I visited Dak Po Pho, Kong Chro district (Gia Lai) for supervision and find out, besides common difficulties such as low socio- economic development level, poor infrastructure (transport, irrigation, electricity...), local ethnic minorities are faced with very specific problems: lack of housing land, productive land, low education, backward customs and habits etc,. Those are the barriers to poverty reduction, economic development, raising income and improving people's lives.

Thus, in the Report on monitoring implementation of poverty reduction policies and legislation at the 7th Session of the National Assembly XIII took place on May 6th, 2014, we have proposed some solutions to overcome the difficulties in poverty reduction for ethnic minorities. On that basis, the National Assembly issued Resolution No. 76 on the implementation of sustainable poverty reduction goals by 2020, including regulations to increase resources for poverty reduction in ethnic minority areas, especially investment in improving education, building infrastructure, attracting businesses in extremely disadvantaged areas and ethnic minority areas. The Resolution also sets a target of 2020 to fundamentally solve the issues of housing land shortage and 80% of productive land shortage in ethnic minority areas.

Le Ngoc Minh, in Hanoi: Ms. Hoang Thi Hoa, during the past years VBSP has had positive contribution to the success of the country's poverty reduction, and to the overall social security policies. Through supervision, could you please tell how policy credit to the poor and policy beneficiaries is implemented and its effectiveness?

Congressperson Hoang Thi Hoa: Policy credit has been assigned by the Government to VBSP to finance the poor, near-poor households, ethnic minority households, disadvantaged students, and other policy beneficiaries. Detach of VBSP from commercial banks has facilitated lending to the poor and policy beneficiaries. After 13 years, 27.9 million households have received loans. This is a very sounding result.

Congressperson Hoang Thi Hoa

Notably, through multiple channels of information from the voters, through monitoring and supervision, through communication with students ..., I see, preferential lending through VBSP has achieved many sounding results, thus, helping many households to get out of poverty to have a more stable life and helping disadvantaged students to achieve higher results, students no longer have to leave school because of lacking money.

Vu Minh in Thai Binh: As the representative of the voters, how do you assess the social security policies recently, Ms. Khuc Thi Duyen?

Congressperson Khuc Thi Duyen: Social security policies recently are highly appreciated by voters. The policies show efforts of the State and social forces to improve the material life and spirit of the people. These include policies on employment, health, population, housing ... especially poverty reduction programs to satisfy criteria of new rural construction. Policies on employment has helped the poor, especially vulnerable people to overcome difficulties in production and get out of poverty, get better-off as well as give opportunities for people to participate in the mechanisms and policies, such as unemployment insurance... or supporting people facing risks.

 Congressperson Khuc Thi Duyen

 About the issue of housing, clean water, the State gives both grants and loans to help the people. I think investment of the State for social security is increasing. In 2012, investment for social security was 5.88% but in 2015, it increased up to 6.6% of GDP. Besides, social security policies for the first time are defined in the Constitution 2013. This clearly reflected concern of the Party and State.

Hoang Minh Anh in Ha Nam: As one of the leaders of VBSP- the bank playing a key role in implementing policy credit, how do you assess your policy credit implementation during the last years?

Deputy General Director Vo Minh Hiep: Firstly, on behalf of VBSP Management, thank you readers’ interest in our bank’s activities. During the last time, the Party and the State always care about implementation of social security policies as a task and also a motivation for socio-political stability and sustainable development, ensuring social security is a condition for ensuring society development toward market economy, reflecting the good nature of our regime.

Deputy General Director Vo Minh Hiep (the second from the left side)

In recent years, along with achievements of market economy innovation, our country has a major effort in investing and innovating policy mechanism on social security to improve the lives of people. Ensuring social security is tied with social and economic development. Despite limited resources, the Party and the Sate always take care of social security, set human development tasks in relation to economic development, and economic development in relation to social welfare and social security, particularly focusing on investing in mountainous areas, ethnic minorities, poor districts, communes, villages and extremely disadvantaged coastal areas, islands. Accordingly, many of the social security policies are issued. Since then, policy credit activities have been widely implemented, contributing to the goal of sustainable poverty reduction of the country.

Bui Hoai Nam in Hanoi: Mr. Hung, recently, the Prime Minister promulgated Decision 306/QD-TTg on adjusting lending amount to business and production households in disadvantaged areas. Accordingly, from March 15th, 2016, maximum loan size for a business and production household is 50 million dong instead of current size of 30 million dong. In viewpoint of a policy maker, how this decision would have impacts on business and production households, sir?

 Congressperson Do Manh Hung: We appreciate this adjustment. Maximum loan amount of 30 million dong/household has been applied for a long time and was very effective. However, under the supervision and evaluation, we found that such loan size does not meet with practical business and production requirements in many localities. For example, an ethnic minority household wants to borrow a loan for cow rising, such loan amount does not meet capital requirements. Or in the Highlands, our people want to grow industrial crops such as rubber, tea, coffee; a loan of 30 million dong cannot meet capital requirements. 

From such practice, Resolution No.76 of the National Assembly on sustainable poverty reduction required to adjust beneficiaries, loan amount, interest rate, loan term in policy credit to take steps to ensure lending resources in poverty reduction. Therefore, it is necessary for the Government to adjust maximum loan amount per household from 30 million to 50 million dong. However, proper fund mobilization and supplement must be calculated to ensure funding resources to provide loans.

I strongly believe that the implementation of this policy shall contribute to create a new momentum for sustainable poverty reduction especially in disadvantaged socio – economic areas, and will create new models, new move for sustainable poverty reduction.

Trung Hieu in Ha Nam: Through meeting with voters, the people, especially the poor - those who directly benefit from social security policies – do they feel satisfy with current policies? Do they have any recommendations on social securities?

Congressperson Hoang Thi Hoa: Through business trips for supervision to many localities, especially mountains areas such as Cao Bang, Lai Chau, Ha Tinh, I saw and heard from local authorities that the people are very happy with preferential credit from VBSP, serving attitude of VBSP staff is good and preferential lending policies has help them to develop production, improve their living standards. However, the people also ask for longer loan duration that meet production cycle such as forestation, livestock raising etc,.

Minh Anh in Hanoi: The country renovation has brought many important achievements in economics and society, including strengthening and improving the system of social security policies, however, the system of social security policies also revealed many problems and shortcomings which need to be addressed and improved. How do you think about this?

Deputy General Director Vo Minh Hiep: Besides many achievements there exist shortcomings in implementing social security policies, including:

- Since 2009 up to now, due to the global economic crisis, our economy has been affected, thus, it is more difficult to mobilize funding for social security activities.

- Although the war ended more than 40 years ago, but its consequences are still heavy, many people need help. Besides, Vietnam is among Southeast Asian countries that is strongly affected by climate change consequences as drought, storms, floods, sea level rise ... causing major damage.

- According to the National Assembly, the results of poverty reduction policies implementation are not really sustainable; the poverty rate is still high in ethnic minorities, remote areas or areas with socio - economic difficulties.

- Along with socio - economic, the trend of population aging poses higher cost challenges related to health care for the elderly, social security policies etc,.

In order to ensure better social security policies for the people, promote economic development of the country, it is necessary to invest more on social security policies, these policies must be placed on a par with economic policies, implemented in line with economic development and matched with the level of development and capacity of resources in each period.

In addition, social security should be focused to ensure minimum living standards and timely supports to disadvantaged people. Social security is considered a routine task, ensuring that people have access to basic social services at minimum level, step by step increase income. Particularly, preferential credit to the poor, near – poor and policy beneficiaries need more attention and funding resources to enhance support to the people.

Hoang Ba Thinh in Ha Giang: Ms. Khuc Thi Duyen, overlap or duplication of various polices in aspects of beneficiaries and geographical areas leading to the fact that in a same area and with same beneficiary, support amount is different between various policies which cause difficulties in implementation and monitoring (for example, the policy of lending to develop production, investing in infrastructure, education etc,.), what are solutions to this situation?

Congresswoman Khuc Thi Duyen: This overlap is due to spread in policy formulation. In the past, there were 16 national target programs; some contents in such programs are deployed by various Ministries and agencies resulting in duplication. At present, the Parliament decides for the period of 2016 – 2020, there are only 2 national target programs- new rural construction and sustainable poverty reduction. This will help to decentralize management and investment policies. Besides, funding for management and administration is also decreasing.

 Quoc Dat (lenanguyen@gmail.com): On February 26th, the Prime Minister issued Decision No. 307/QD-TTg adjusting lending amount for traders doing business in disadvantaged areas. Accordingly, traders borrow up to 50 million dong do not have to secure loans. Traders borrowing over 50 million dong have to make loan guarantee as stipulated by the law on secured transactions and by the guidance of VBSP. In your opinion, would such regulation make it "difficult" for enterprises intending to invest in disadvantaged areas, sir?

Congressman Do Manh Hung: I think, any credit operation must insist on capital preservation and growth. Therefore, Decision 307/QD-TTg of the Prime Minister regulating traders borrowing more than 50 million dong to have loan guarantee in compliance with the law is necessary. However, such regulatory framework may create certain difficulties for some traders wishing to borrow a larger amount. In that case, the trader must also determine co-responsibility with the State in managing, utilizing borrowed capital to ensure that our resources are conserved, used properly and effectively. Under the implementation process, I believe, the State and the people together will come up with solutions to remove difficulties for creating best conditions for the people to access and borrow policy loans.

Congressperson La Minh Tien in Thanh Hoa: Ms. Khuc Thi Duyen, I see social policy borrowers mostly are women, but beneficiaries from the loans including men. Why don’t men as household heads borrow under their name for production development?

Congressperson Khuc Thi Duyen: In our conception, the woman is "the money keeper," who manages daily expenditure in the family, so normally the woman borrows loans. By borrowing themselves, they feel more convenient in managing loan utilization and debt repayment. However, Thai Binh province in particular and the whole country in general, many men borrow under their name for the households, not only women.

Kim Thoa (ngocdanh@yahoo.com): Dear Madam, what are roles of VBSP staff in helping the poor and policy beneficiaries using loans effectively? As we can see, there are cases in which borrowers getting loans and don’t know what to do or how to use loans effectively?

Congressperson Hoang Thi Hoa: Loan appraisal of VBSP staff plays a very important role. Careful appraisal helps increasing loan utilization effectiveness. Compared to previous years, I can see people have so many advances in loan utilization thanks to higher awareness on borrowing and repayment etc,... However, more concern is needed to improve linkage between guiding people on production and applications of science and technology and loan utilization to ensure higher efficiency.

Thanh Lan in Kien Giang: To promote new concept that the poor are not passive policy beneficiaries but they are partners of poverty reduction policies in the future, how will policy credit be, sir?

Congressperson Do Manh Hung: Credit policy itself has been recognized as a solution to overcome passive mode and promote dynamism, creativity and initiative of the people. Because credit is not a grant but a loan, which is borrowed and must be paid. Therefore, the credit policy also makes policy beneficiaries responsible for their borrowing money, they should use effectively to ensure principal and interest payment. However, in fact, many households have not been very active, lack of dynamism in production and business, not willing to borrow or taking loan without proper plan to best utilize that funding.

To change this situation, some solutions can be:

- Strengthening dissemination of information on the content, objectives, mechanisms of social policy credit; on benefits, responsibilities, and the way of using the money, more people then better understand and access policy credit.

- Social credit policies must be linked to training in agricultural, forestry, industrial promotion, extension etc., and associated with science and technology transfer for borrowers to know how to use loans most effectively.

- Mobilize more resources to ensure sufficient funding for policy credit. During the implementation process, it is necessary to ensure publicity, transparency and democracy for the people to be fully active in selection, access and use of borrowed loans.

Hieu Hai in Bac Giang: As the deputy head of Bac Giang National Assembly delegates, to improve efficiency of the credit policy, how to monitor implementation of this sector to ensure sustainable poverty reduction and social security, Madam?

Congressperson Hoang Thi Hoa: Bac Giang is a mountainous province with many ethnic minorities, poor and extremely disadvantaged households, living mainly in Son Dong, Luc Ngan, Luc Nam, Yen The districts. In recent years, poverty alleviation in the province has many achievements, which are remarkably contributed by VBSP.

For Bac Giang National Assembly delegations, during the past term we have closely coordinated with banks, especially VBSP. Thereby, recommendations of voters have been transferred to the provincial VBSP branch and obstacles have been resolved in a satisfactory manner. However, to help ethnic minorities to overcome difficulties on housing and clean water and sanitation, we still need more preferential investments from VBSP.

Le Hoai Anh in Tuyen Quang: I'm a voter, I would like to ask Mr. Do Manh Hung, as the social policy, why do we give loan but not grant to grant the disadvantaged, the poor, the people in remote areas?

Congressperson Do Manh Hung: We have a system of social policies for the poor, including credit policy, policies to support education, health, vocational training, job creation, housing support, information, legal assistance etc,. Among these policies, only credit policy provides lending, others are mostly direct support policies such as subsidies for tuition fee; free health insurance for the poor; cash assistance for housing; subsidies for electricity etc,.

However, in practice, some people have been relying on supports; some households even don’t want to escape from poverty to continue being policy beneficiaries. Therefore, in the future, sustainable poverty reduction policies will focus on credit, other support policies will follow a downward trend and, if implemented, are all support policies under specific conditions. This adjustment aims to promote more activeness of the population, gradually decreasing support dependence.

Le Bao Phong in Hoa Binh: Mr. Do Manh Hung, you have participated in monitoring missions relating to poverty reduction policies. So in your opinion, to improve the efficiency of policy credit, how monitoring of this sector should be?

Congressperson Do Manh Hung: The implementation of legal policies on poverty reduction must be monitored comprehensively, frequently and continuously. Resolution 76 of the National Assembly has decided for each 2 years, the Government must report to the National Assembly on the results of poverty reduction. That means for every 2 years the National Assembly will conduct monitoring on this issue. Besides, the Resolution also requested the People's Council at all levels to strengthen surveillance under its function and competence.

For surveillance activities to be really effective, I think we should focus on following requirements:

- Monitoring must reach the poor; each monitor mission must arrange time for direct contact with the poor, listening to their opinions, their concerns, recommendations, proposals so that we can have a comprehensive, objective and realistic review to propose solutions and policies for timely meeting demands and aspirations of the people.

- Strengthen monitoring activities at the local level because, in the coming period, we require "poverty reduction for each address" – i.e., poverty reduction based on reasons causing poverty of each household. Corresponding monitoring requirement is monitoring to each address, i.e monitoring poverty reduction to each poor household, therefore, monitoring should be mainly at local level.

- Focus on monitoring activities of the Fatherland Front at all levels and self- monitoring activities of the people in order to promote democracy, openness and transparency in the implementation of poverty reduction policies.

Phan Dieu Linh in Hai Phong: Preferential policy credit to the poor to develop production is an important component of the national target program for sustainable poverty reduction in Vietnam. So, how do poor households in poor districts borrow from VBSP?

Deputy General Director Vo Minh Hiep: Currently, eligible poor households in poor districts having demand for loans can borrow from following credit programs of VBSP:

- Lending to poor households;

- Job creation;

- Disadvantaged students;

- Extremely disadvantaged ethnic minorities;

- Loans to poor households for housing purpose phase 2 with the maximum lending amount being raised to VND 25 million/household;

- Clean water and rural sanitation;

- Only for poor households in poor districts, there are other programs: lending for production development and livestock rising up to VND 10 million/ household with interest rates equaling to 50% of such applicable to poor households in the same period. The duration of applying the preferential rate can be up to 3 years.

- Lending for working overseas with maximum loan amount of 100% of the contractual costs, interest rates equaling to 50% of such applicable to poor households in the same period. Maximum loan duration is equal to working duration overseas.

Binh An in Thai Binh: Dear Ms. Khuc Thi Duyen, could you please be more clear about impacts of VBSP’s policy credit and new rural construction?

Congressperson Khuc Thi Duyen: Currently, Thai Binh has 164 rural communes being qualified as new rural area (62.3%) and a new rural district (Hung Ha). VBSP is the credit institution playing a very important role in contributing to the implementation of 19 criteria of new rural construction. Especially such loan programs as lending to poor households, safe water and rural sanitation, housing, disadvantaged students, job creation etc. I highly appreciate operation of VBSP in Thai Binh province.

Minh Khue in Khanh Hoa: To create a breakthrough, powerful and comprehensive transformation of credit policies, enabling poor, near- poor households to escape poverty sustainably, what are priorities of VBSP, Sir?

Deputy General Director Vo Minh Hiep: The priorities of VBSP are:

Firstly, focusing on lending to the poor, near-poor households, especially poor ethnic minority households to meet borrowing demands for implementing business plans.

Secondly, prioritize funding for areas having high poverty rate, mountainous and remote areas, especially the Northwest, the Highlands and the Southwest.

Thirdly, close coordination with local authorities, mass organizations for mounting policy credit with agriculture, forestry extension and science and technology transfer to improve product quality and productivity, income generation, sustainable poverty reduction.

Fourthly, taking concern and timely processing risk handling as households facing force majeure to help them quickly stabilize their life and restore production.

People Representative Newspaper