On March 2nd, in Hanoi, the State Bank of Vietnam (SBV) held a scientific workshop on “Credit for cooperatives: Current situation and solutions”. The forum is an opportunity for policy makers, governing bodies, and credit institutions to exchange, discuss and find out legal gaps in order to improve mechanisms, policies and propose new solutions to improve the efficiency of capital supply and access to credit for cooperatives.
SBV First Deputy Governor Dao Minh Tu chaired the seminar
The seminar was chaired by SBV First Deputy Governor Dao Minh Tu with the participants from departments and agencies under the SBV; Department of Economic Cooperation – Ministry of Planning and Investment; Department of Economic Cooperation and Rural Development – Ministry of Agriculture and Rural Development; Vietnam Cooperative Alliance…
At the opening ceremony, the First Deputy Governor Dao Minh Tu said that in Vietnam, the collective economy, the core of which is the cooperative, has formed and developed for nearly 70 years, making important contributions to national liberation, construction and defense of the nation.
According to statistics, there are currently 17.3 million households in rural areas, of which 9 million households have a low average farming area (Mekong River Delta 0.71 ha, Red River Delta 0.22 ha, central coast 0.01 ha, average 2.5 plots/household). Due to limited capital and assets, farmers and individual households have to associate and cooperate in production and business organization following the collective economic model with aim at sustainable efficiency.
“The orientation of the Party, the Constitution and the laws of the State, the practice of developing collective economy and cooperatives in Vietnam as well as in the world showed that, the development of cooperative economy is objective with strategic and long-term meaning for the socialist-oriented market economy in our country”, the First Deputy Governor affirmed.
Overview of the conference
After 20 years (2002-2021) of implementing the 5th Resolution of IX – Term Party Central Committee on further innovation, development and improvement of collective economy efficiency, the cooperatives in our country have developed in terms of both quantity and quality, overcome persistent weakness; a large part of service cooperatives providing input and output for members has reduced production costs and stabilized product consumption contracts; The collective economy, cooperatives have made significant contributions to economic growth, curbing inflation, increasing export turnover, renewing the growth model associated with economic restructuring, especially in the agricultural economy, ensuring food and food security, adapting to climate change, towards green development and circular economy.
However, development of collective economy and cooperatives in our country has not met the requirements, there are still shortcomings, limitations that need putting in concern and to be resolved, such as: A large percentage of individual households in rural areas has not joined cooperatives and cooperative groups; a major part of cooperatives has small scale, small capital, limited management capacity, low membership association, no reputation and brand in the market, weak capacity in cooperative management; the access to credit of cooperatives has not yet met the production and business needs…
“International experience and practical operations have confirmed that, for the cooperative model working effectively, the capital, especially bank’s credit is considered an important factor. Therefore, it is necessary to conduct study, review and comprehensive assessment of the current credit mechanisms and policies for cooperatives; analyze and evaluate the current status of credit granting activities for this type, thereby finding legal gaps for further improvement of mechanisms and policies and proposing solutions to improve the efficiency of capital supply and credit access for this type of economy,” shared First Deputy Governor Dao Minh Tu.
Collective economic development, in which the core is cooperatives, is a major policy that is concerned and supported by the Party and State. Following up the Party’s guidelines and resolutions, and the State’s laws on the collective economy, the SBV has recently identified the collective economic sector in general, and cooperatives in particular, as one of the subjects of the banking industry that should be given priority in credit investment, and implementation of many incentive and support solutions.
By the end of 2022, outstanding loans for cooperatives and unions of cooperatives (Cooperative Unions) reached VND 6,316 billion with nearly 1,200 cooperatives and cooperatives unions having outstanding loans; outstanding credit balance for individuals and households, including individual members of cooperatives, by the end of December 2022 reached VND 5,884,058 billion, accounting for nearly 50% of the total credit outstanding balance of the whole economy; in which outstanding loans to individuals and households engaged in production and business activities in agriculture and rural areas is VND 2,030,167 billion.
In the coming time, closely following the policy in Resolution No. 20-NQ/TW dated June 16, 2022 of the Central Committee on “Increasing access to bank’s credit for effective production and business projects”, and Resolution No. 09/NQ-CP of the Government dated February 2, 2023 on the Government’s Action Program to implement Resolution No. 20-NQ/TW, the SBV will continue to direct credit institutions perform some tasks.
The balancing capital and offering credit will focus on cooperative economic organizations and cooperatives operating in the fields of production and business, priority areas according to the Government’s policy, effective cooperatives of new models, cooperatives developing those products based on the strengths that follow the value chain applying high technology with high commercial value, cooperatives which perform innovation and digital transform in accordance with the provisions of the laws. Regularly doing research and developing a variety of bank’s credit products; reviewing, improving and renovating credit granting processes, procedures and conditions in line with the requirements and operational practices of cooperatives in order to gradually expand and strengthen capital support as well as access to bank’s credit for collective economic types.
In addition, the SBV will do further review, research and make measures to improve credit policies and mechanisms that will focus on credit policies for agricultural and rural development in order to increase credit access of cooperatives. SBV will continue effective implementation of credit programs to support interest rates, National Target Programs with aim at supporting cooperatives for stability, economic recovery and development. SBV will regularly grasp difficulties in borrowing activities of cooperatives and promptly apply solutions to remove them, direct SBV branches in provinces and cities to actively coordinate with departments, branches, socio-political organizations and related units in order to grasp the situation of production and business activities of cooperative economic organizations in the area, and promptly give advises to the Party committees and local authorities on solutions or propose the competent authorities solutions to remove difficulties and support the development of collective economic sectors in the area.
According The banking journal.
