Mr. Tran Van Tan, Head of the Credit Office at the State Bank of Vietnam's 's Credit Department, told the “Towards Sustainable Agri-Finance in Vietnam - From the Case of Lam Dong Province” conference held by the Japan International Cooperation Agency (JICA) and the Vietnam Academy of Social Sciences (VASS) in Hanoi on March 18 that agriculture plays an important role in Vietnam’s economic structure and though it accounts for only around 17.4 per cent of GDP it employs over 50 per cent of the country’s workforce, ensures national food security, and contributes to export turnover.

Agriculture, forestry and fishery exports earned $30.45 billion in 2015, accounting for 18.8 per cent of Vietnam’s export turnover. During the global economic crisis from 2008 to 2013 agriculture was a pillar of Vietnam’s economy and the main factor in stabilizing the rural economy.

Recognizing the role of agriculture, the conference of the 10th Party Central Committee issued Resolution No. 26 on August 5, 2008, strengthening social mobilization, including using bank credit. The government also promulgated Resolution No. 24 on October 28, 2008, introducing a plan of action to implement the resolution on agriculture, farmers, and rural areas set out at the conference of the 7th Party Central Committee.

The State Bank of Vietnam (SBV) has determined that agriculture is one of five sectors to enjoy priorities and has directed credit institutions to balance their budgets and meet the sector’s demand for capital in a timely manner. At the same time the central bank has applied a credit policy and monetary policy tools to assist the sector.

Related provisions include the ceiling on short-term interest rates applied to the agriculture sector being 1 to 2 per cent lower than other sectors, the promulgation of Circular No. 20 on reducing reserve requirements for credit institutions that have 40 per cent of loans to the agriculture sector, and the giving of priority in refinancing to credit institutions that meet difficulties in loans but have 40 per cent of loans to the agriculture sector.

Outstanding credit for agriculture has increased steadily over recent years. Growth in the 2011-2015 period averaged 17.39 per cent; higher than the average credit growth of 13.51 per cent.

As at the end of 2015, outstanding credit for agriculture stood at $37.85 billion, up 13.32 per cent against 2014 and accounting for 18.12 per cent of total credit.

The proportion of bad debts in agriculture as at the end of 2015 was 1.54 per cent, down from 2.28 per cent at the beginning of the year. The proportion is often less than the average.

The results show that credit policies for agriculture and rural areas have been suitable and have met people’s demand.