On August 15, 2023, at the headquarters of the State Bank of Vietnam (SBV), the SBV, in coordination with the International Finance Corporation (IFC) and the Swiss State Secretariat for Economic Affairs (SECO), organized a Consultation on the Market Development of Supply Chain Finance: A Main Tool for SME and Agri Finance.
Deputy Governor Pham Thanh Ha speaks at the Consultation
This Consultation was composed of two main sessions: (i) Session 1: The Market Development of Supply Chain Finance: A Main Tool for SME and Agri Finance; and (ii) Session 2: Discussion and Q&A.
An overview of the Consultation
In his opening speech, SBV Deputy Governor Pham Thanh Ha shared that, the scale and scope of supply chain financing in Vietnam are still limited, focusing principally on agriculture and the support industries, and mainly provided by a number of commercial banks. At the same time, micro, small and medium enterprises (MSMEs) have encountered many limitations in accessing these resources. From the viewpoint of a state management agency, the SBV has assessed that there are currently a number of challenges facing supply chain finance in Vietnam, such as (i) the need for improving the legal frameworks in order to promote the development of supply chain finance; (ii) the development of a supply chain finance market has mainly focused on the agriculture sector, with restricted access by other sectors; (iii) the need for enhancing the accessibility to supply chain credit by improving the statistics and the transparency of the enterprises’ financial information systems, enhancing the governance of the enterprises when joining the supply chains, especially the global supply chains; and (iv) the need for improving the system of in-depth information of customers (big data) and the e-platforms.
Mr. Thomas James Jacobs, IFC Country Manager for the Mekong region covering Vietnam, Cambodia, and Lao PDR, speaks at the Consultation
Also at the Consultation, Mr. Thomas James Jacobs, IFC Country Manager for the Mekong region covering Vietnam, Cambodia, and Lao PDR, delivered his opening speech. He expressed the IFC’s beliefs that supply chain financing is one of the instruments that can bring benefits to agriculture and enterprise finance. In addition, from the IFC side, Mr. Jinchang Lai, Principal Operations Officer for Asia and Pacific at the IFC, and Mr. Rajesh Mehra, Trade & Supply Chain Finance Regional Practice Group Lead for Asia and Pacific, delivered their presentations on (i) the role of supply chain finance (SCF) for SME and agriculture finance; (ii) the eco-system for SCF; (iii) the Government’s support for the development of an SCF market; (iv) leveraging the advantages of technologies to mitigate the credit risks in SCF; (v) the challenges faced by commercial banks in the SCF operations; and (vi) how to promote further the SCF market in Vietnam.
At the Consultation, representatives from the SBV entities also discussed and exchanged their views about the IFC specialists’ recommendations. This was an opportunity for the SBV to promptly update information on the SCF market in Vietnam, especially regarding the matters shared from the international perspectives, thereby helping the SBV to continue its research and improvement of the legal frameworks in the context that the SBV is currently in the process of reviewing, formulating and supplementing substances in the draft Law on Credit Institutions (revised), and other relevant legal documents.
Toward the end of the Consultation, Mr. Jinchang Lai, on behalf of the IFC, assessed that the Consultation had been an opportunity for the parties to exchange their knowledge and practical experience in order to promote SCF in the emerging economies including Vietnam; thereby, helping the Government agencies to develop practical foundations for further researches and consideration in their efforts of improving the legal frameworks for the SCF market in Vietnam.
Le Hang