Current State of Microfinance in Vietnam

By: Tran Chau, KF13, Viet Nam

Vietnam currently has 52 microfinance institutions offering microloans and other services to the impoverished. Kiva is partnered with three, SEDA in Hanoi, TYM in Hanoi, and FPW in Thanh Hoa. Of the 52 MFIs, only one, TYM, is officially licensed by the Vietnamese Government.

I attended the second annual microfinance conference hosted by Citigroup a couple weeks ago. There, TYM was invited to give a presentation on the future of microfinance in Vietnam. The MFI identified three external and internal challenges. I think that these challenges provide insight into the current political landscape and the level microfinance has developed to in Vietnam.

EXTERNAL

Challenge #1 – There are no standards established to regulate financial statements

Challenge #2 – There is no established registration or licensing fee for an official MFI license, and there are neither established procedures to follow nor paperwork to fill out when trying to expand operations

Challenge #3 – The local government office requires that official MFIs file official reports, yet no reporting scheme has been issued

INTERNAL

Challenge #1 – Clearly define functions, roles, and responsibilities for each position within the organization, and develop a new salary scheme to ensure workers’ rights

Challenge #2 – Adjust software to align with current network structure and reporting scheme required by Microfinance Investment Vehicles

Challenge #3 – Adjust and create internal control regulations

As you can see, the regulations in Vietnam are a murky, and TYM (along with larger MFIs in Vietnam) is in the process of increasing visibility in its operations as it grows.

Thank you for supporting Kiva’s efforts in Vietnam. With your help we can continue to help our partners grow and to extend liquidity to impoverished areas in Vietnam in 2011. Happy new year from Vietnam!

Tran Chau is a Kiva Fellow (KF13) currently based in Ha Noi, Viet Nam.

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