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Dinh Vu

Local Economy

Last updated: Wednesday, May 23, 2018


Widening Credit Flows for Agricultural and Rural Development

Posted: Tuesday, August 29, 2017

On June 9, 2015, the Government issued Decree 55/2015/ND-CP on credit policies for agricultural and rural development in replacement of Decree 41/2010/ND-CP. Over the past two years, the banking sector of Soc Trang province has achieved positive results, speeding up agricultural restructuring and helping sustain agricultural development and realise the National Target Programme for New Rural Area Construction.

Benefits for agriculture, farmers
Over the past two years of executing Decree 55, outstanding loans for agriculture have been on the rise. As of March 31, 2017, outstanding loans for agriculture and rural development in Soc Trang province reached VND13,551 billion, 0.24 per cent higher than that at the end of 2016 and equivalent to 53 per cent of total outstanding loans. Two years with Decree 55, the credit balance for agriculture and rural development areas in Soc Trang province more than doubled. While pushing up credit growth, credit quality in the province is under control. The rate of bad debts to agricultural and rural loans according to Decree 55 is on the fall.

Mr Pham Kim Hung, Deputy Director of the State Bank of Vietnam (SBV) - Soc Trang Branch, said, Decree 55 created new breakthrough steps for agricultural and rural development thanks to a lot of changes from the replaced Decree 41 and strong support from farmers. Remarkable new changes include a wider scope of borrowers and higher limits for unsecured loans, thus facilitating customers in agriculture and rural areas to access more bank credit. This was also a concrete move to restructure the agricultural sector, enhance its competitiveness, and sustain agricultural development. With Decree 55, tens of thousands of farmers in Soc Trang province had had the opportunity to access credit sources. Many farmers and production units have made bold investments in production and business expansion to gain profit and facilitate industrialisation and modernisation of agricultural production and rural development in Soc Trang province.

Boosting value chain-based loans
Right after Decree 55 of the Government and Circular 10/2015/TT-NHNN of the State Bank of Vietnam (dated July 22, 2015) on instructions for the implementation of Decree 55 were promulgated, SBV Soc Trang quickly drafted preferential credit programmes for enterprises in target fields such as agricultural and rural development loans according to Decree 55/ND-CP, high-tech agricultural lending programme and organic agriculture programme under Government Resolution 30/NQ-CP dated March 7, 2017; on shipbuilding loan support for fishermen according to Decree 67/2014/ND-CP, credit programme for aquaculture and aquatic processing; housing credit programme; disaster relief and recovery support policies, mangroves, environmental incident remedy programme, and pig industry support programme.

Hung said, Decree 55 with many new contents like credit policies in support of value chain-based production and high-tech agricultural production is a condition for successfully restructuring the agriculture sector of Soc Trang province according to the Resolution of the 13th Provincial Party Congress (2015-2020 term). However, the biggest difficulty in carrying out value chain lending is the lack of close linkage among producers, traders, processors and consumers. Most farmers want to self-finance their initial investment costs (seeds, fertilisers, pesticides and others.) and their biggest aspiration is enterprises sign contracts on output purchase at the market price at the time of purchase. Meanwhile, enterprises are concerned about supply capacity and advance management of inputs.
He added that in order to overcome these shortcomings for better enforcement of Decree 55/2015/ND-CP in Soc Trang province, fully and promptly meet the capital demand for agricultural and rural development, there is a high need for active support from all levels and branches, especially the local authorities, to further engage in building effective collective economic development models to integrate and promote better value chain lending.

Hoang Lam

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