Increasing access to capital for the collective economic sector and cooperatives

Overview of the Workshop.

Over the years, the collective economy and cooperatives have developed both in quantity and quality, but they still fall short of expectations and have shortcomings and limitations that need attention and resolution. These include: a large proportion of individual households in rural areas have not yet joined cooperatives or cooperative groups; a large number of cooperatives are small in scale, have limited capital, limited management capacity, low member linkages, lack prestige and brand recognition in the market, and weak cooperative management capabilities.

Notably, access to credit capital for cooperatives is still difficult because they mainly do not meet the minimum requirements and loan conditions, so capital for production and business is limited.

Speaking at the workshop, the Chairwoman of the Vietnam Cooperative Alliance, Cao Xuan Thu Van, stated that one of the current difficulties facing cooperatives is the issue of capital. According to statistics from the Vietnam Cooperative Alliance, only 10% of cooperatives receive loans from the Cooperative Development Support Fund. Furthermore, a survey of over 300 cooperatives revealed that up to 80% have to borrow from the informal market and the black market credit system at high interest rates and short terms, primarily to repay debts while waiting for official credit.

According to Ms. Cao Xuan Thu Van, it is very difficult for cooperatives to access capital sources. Currently, these models can only borrow from support sources from the Farmers' Association and the Women's Association, but these sources are still not enough to help cooperatives expand and develop.

"Many supportive solutions from various sides are needed for the collective economic sector and cooperatives, including support mechanisms and policies, guiding regulations for the implementation of the Law on Cooperatives effective from July 1, 2024, and state support resources such as the Cooperative Development Fund, policies on technology, and domestic and international market development to ensure the effective and proper development of the collective economic sector and cooperatives," said a representative of the Vietnam Cooperative Alliance.

Permanent Deputy Governor of the State Bank Dao Minh Tu (right) and President of the Vietnam Cooperative Alliance Cao Xuan Thu Van (left) co-chaired the Workshop.

At the seminar, Deputy Governor of the State Bank of Vietnam, Dao Minh Tu, affirmed that to support the development of cooperatives, the banking sector has implemented many preferential credit policies according to Decree 55/2015/ND-CP dated June 9, 2015, and Decree 116/2018/ND-CP dated September 7, 2018, of the Government. In addition, the Social Policy Bank is also implementing many preferential credit policies of the State, including preferential loans for cooperatives and cooperative unions under Decree No. 28/2022/ND-CP dated April 26, 2022, implementing the National Target Program for socio-economic development in ethnic minority and mountainous areas from 2021 to 2030.

According to data from the Department of Credit for Economic Sectors (State Bank of Vietnam), by the end of February 2024, credit to cooperatives and cooperative unions reached VND 6,024 billion, a decrease of 1.69% compared to the end of 2023, for approximately 1,200 cooperatives and cooperative unions. Of this amount: Credit to agricultural cooperatives reached VND 2,000 billion; unsecured loans to agricultural cooperatives and cooperative unions reached VND 153 billion. Loans for agricultural linkages reached VND 10,012 billion, an increase of 3.76% compared to December 31, 2023. No outstanding loans were incurred by cooperatives under the linkage model.

In the coming period, to promote credit growth for the collective and cooperative economic sector, Deputy Governor Dao Minh Tu stated: The State Bank of Vietnam will direct credit institutions to increase credit safely and effectively, focusing on production sectors and priority areas in accordance with the Government's policies; create favorable conditions for businesses, cooperatives, and people to access bank credit; research and implement credit products suitable to the specific characteristics of the collective and cooperative economy; and strengthen connections to overcome difficulties in borrowing.

Furthermore, the State Bank of Vietnam will continue to improve credit policy mechanisms to facilitate lending in general and to cooperatives in particular, such as: surveying, evaluating, and summarizing Decree No. 55/2015/ND-CP on credit policy for agricultural and rural development to propose amendments and additions to regulations that facilitate and enhance access to credit for individuals, businesses, and cooperatives; continuing to research and amend Circular No. 02/2023/TT-NHNN on restructuring repayment terms and maintaining the same debt classification for customers;…

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