Phase II of Technical Assistance Project for Ministry of Justice Launched

According to the IFC, a member of the World Bank, this institution will continue its assistance to the National Guaranteed Transaction Registration Bureau and Ministry of Justice to develop Vietnam’s financial market by improving the quality of guaranteed loans. The signing ceremony is a landmark for the inauguration of the second phase of the assistance project, which further improves a legal frame for guaranteed transaction registration in Vietnam and supports purchases, installation and management of the first system of electronic signature registration in Vietnam. The two sides will execute the project during the period August 2008 to December 2009.

The instability in credit access remains a big obstacle to the development of the private sector in Vietnam. Lending still relies on mortgage and private enterprises are restricted from credit as they cannot use their movables like equipment, collectibles, or stocks to mortgage for borrowings. IFC manages its advisory division – the Mekong Private Sector Development Facility (IFC- MPDF) to aid the Vietnamese Government in extending the scope of assets that can work as mortgages and simplifying procedures. In additions, the IFC- MPDF is also helping the Ministry of Justice to set up a modern and simple guaranteed transaction registration system. 

Nguyen Thuy Hien, Director of the National Guaranteed Transaction Registration Bureau, the beneficiary of the Project phases 1 and 2, said “the project’s activities would contribute to the foundation of Southeast Asia’s most up-to-date system of guaranteed transaction registration to satisfy the demands of registration and information provision to all organisations and individuals. Accordingly, the system will play a part in improving enterprises’ credit accessibility, facilitating debt claims from credit institutions and cutting costs”. 

In the first phase, IFC- MPDF analysed the lending environment through a survey aimed at building a national financial database. Findings from that survey helped the Ministry of Justice to comprehend concerns of the creditors and problems encountered by the private sector when accessing credit sources. Another survey will be conducted at the end of the second phase to evaluate the impacts of the project’s assistance in reforming the legal frame and registration process. This survey will also identify values added by the electronic registration system to enhance credit accessibility. Findings in the second phase will be used to evaluate the validity of legal and institutional reforms and act as basis for further improvements.