APEC TATF Country Case Study on Micro Finance in Vietnam

An underlying pillar of successful and robust micro, small and medium enterprises (MSME) development and to fostering gender equity in the APEC region, specifically among the most vulnerable urban and rural poor, especially women, is access to sustainable credit for capital investment. Traditional banking institutions in developing economies are often unable to support the risk of lending to this sub-population. A strong need has been identified to develop and sustain non-banking financial institutions to motivate small investors, provide for wealth generation and allow an entry point for the urban and rural poor, and women entrepreneurs in particular, into enterprise development.

 

 

The challenges faced by MSME and women entrepreneurs in accessing adequate resources for business start-up and financing, particularly in APEC developing economies, have been exacerbated by the recent economic and financial crisis. In response, micro-credit has been internationally recognized as an important and innovative financing system for MSME development. 
 

APEC’s longstanding commitment to micro, small and medium enterprise (MSME) development as well as the role of microfinance for sustainable growth and development have been consistently reaffirmed by APEC Leaders and Ministers. To support these key outputs and further build upon APEC’s existing work in microcredit, APEC Training Assistance and Training Facility (TATF) develops the case study to see the steps an economy can take to build and improve micro-credit facilities, particularly in terms of identifying strategies targeting the rural poor and women entrepreneurs. Vietnam has been selected as the subject of the case study, but the case study is intended to provide “lessons learned” for all APEC member economies and will include a focus on gender equity issues pertaining to micro-credit facilities. 
 

The purpose of the case study is to explore the types of financial resources available to small-scale businesses in the APEC region through a case study approach based on Vietnam. The case study identifies the challenges faced by Vietnamese MSME owners and women entrepreneurs to start, build, grow and maintain businesses via micro-credit facilities, where appropriate.

 

Faced with myriad of institutional and implementation challenges, the government is currently considering a series of reforms to build the foundations for a competitive and sustainable microfinance system that would be able to provide comprehensive services to customers with greater private sector participation. This would enable microfinance providers to more efficiently respond to customers with a broad range of quality financial services to customers with greater efficiency and flexibility. The case study will therefore need to take these recent and ongoing political developments into account.

The case study on microfinance in Vietnam has been implemented with significant support, inputs and contribution by Economica Vietnam. The case study is planned to be presented at an APEC Microcredit Workshop to be organized in December 2010 in Hanoi and to which Economica Vietnam is also expected to contribute. Moreover, the case study is intended to support APEC’s efforts to inform policy officials and practitioners alike in APEC economies of best practices in micro-credit so they are better able to understand specific steps they can take to create a more supportive environment that will promote the successful development and implementation of micro-credit and ease access to finance for the most vulnerable populations, especially rural poor and women entrepreneurs.

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