Scribd Logo
Upload

Welcome to Scribd!

  • 133 views

    Challenges of Digital SME Finance Innovation in Viet Nam

    Uploaded by

    ADBI Events
    This presentation was given at the How Digital Innovation Can Help Small and Medium-Sized Enterprises Access Finance in Asia conference held in Bangkok, Thailand on 29 - 30 October 2018. Read more about the event: https://bit.ly/2JUeE8x

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Challenges of Digital SME Finance Innovation in Viet Nam

    Uploaded by

    ADBI Events
    133 views15 pages
    This presentation was given at the How Digital Innovation Can Help Small and Medium-Sized Enterprises Access Finance in Asia conference held in Bangkok, Thailand on 29 - 30 October 2018. Read more about the event: https://bit.ly/2JUeE8x

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This presentation was given at the How Digital Innovation Can Help Small and Medium-Sized Enterprises Access Finance in Asia conference held in Bangkok, Thailand on 29 - 30 October 2018. Read more about the event: https://bit.ly/2JUeE8x

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    133 views15 pages

    Challenges of Digital SME Finance Innovation in Viet Nam

    Uploaded by

    ADBI Events
    This presentation was given at the How Digital Innovation Can Help Small and Medium-Sized Enterprises Access Finance in Asia conference held in Bangkok, Thailand on 29 - 30 October 2018. Read more about the event: https://bit.ly/2JUeE8x

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 15

    CHALLENGES OF DIGITAL

    SME FINANCE INNOVATION IN


    VIETNAM
    Tran Thi Lan Anh – State Bank in Vietnam

    October 2018
    The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development
    Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee
    the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not
    necessarily be consistent with ADB official terms.
    MAIN CONTENTS
    I. OVERVIEW ON SME DEVELOPMENT AND
    DIGITAL SME FINANCE INNOVATION IN
    VIETNAM
    II. CHALLENGES OF DIGITAL INNOVATION FOR
    SME FINANCE IN VIETNAM
    III. POLICY RECOMMENDATION
    OVERVIEW
    1. SME DEVELOPMENT IN VIETNAM
    Country background:
    - VN population: over 94,6 million people.
    - Total area: 331.230 km2 , mountainous area
    accounts for 3/4 of the country.
    - A developing economy: Annual economic
    growth in the last 3 years around 6,2-6,8%.
    - Decreasing proportion of agricultural sector
    and increasing proportion of industrial and
    service sector.
    1. SME DEVELOPMENT IN VIETNAM

    SME development - facts and figures:


    - Number of active SMEs: 635,000 (98% of
    active enterprises in VN)
    - SME contribution: 45% of GDP, 31% of state
    budget, over 5 million jobs.
    - SME Support Law: passed 12/06/2017,
    enforced 01/01/2018.
    SME Support Law
    Human
    Credit Tax and
    resource
    access accounting
    development

    Information Production
    and legal Support place
    consultation

    Technology, SME
    Market incubators, SME
    expansion technical support
    centers, communal
    working place
    SME Support Law

    SMEs transformed
    from household SME finance access
    business, support channels

    Small and medium- SME Development Fund


    Focus on

    sized innovative
    startups,
    SME Credit Guarantee
    Fund
    SMEs participating in
    value chain or in Innovative Startup
    sectoral link clusters. Investment Fund.
    2. SME FINANCE IN VIETNAM
    2.1. SME access to finance:
    - Over 270,000 SMEs (42,5% of active SMEs in
    VN) with outstanding loans from credit
    institutions.
    - Increasing outstanding balance for SME in
    recent years
    - Up to 30/6/2018, SME outstanding balance
    reached 1.402.890 billion VN dong (60 billion
    USD), increased 4,48% compared with 2017,
    accounting for 21% of the total outstanding
    balance.
    SME outstanding balance
    (billion USD)
    70

    60

    50

    SME outstanding
    40
    balance (billion
    USD)
    30

    20

    10

    0
    31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017
    2.2. Digital finance and fintech development

    Digital finance and Fintech


    market drivers

    Sharp increase Government’s


    Growing interest
    in Internet and desire to boost
    of foreign
    smartphone financial
    investors
    penetration innovation
    Digital finance and fintech development
    Fintech market in VN: on the rise, hit $4.4 billion in 2017, est.
    $7.8 billion by 2020

    Digital finance in VN: digital payments, P2P lending, credit


    scoring, wealth management, and personal finance. Dominated
    by digital payment sector

    VN banks: in the first phase of digital revolution

    Insufficient legal framework for fintech and digital financial


    solutions, mostly adjust payment sector, not other sector such
    as P2P lending or crowdfunding
    Digital finance and fintech market
    Key players

    Digital finance services: provided


    by fintech firms and innovative
    financial service providers.

    80 operational fintech firms


    provide varied financial services:
    payments & remittances, crypto
    currency & personal finance
    management.
    Peer-to-peer lending in VN

    1. No legal framework
    2. Existed some P2P platforms

    Timma, Vaymuon, Mofin and


    Lendbiz: target at individual
    consumer loan

    Lendbiz targets at small and


    medium-sized enterprises
    EXISTING POLICIES ON IMPLEMENTING DIGITAL
    TECHNOLOGY TO ENHANCE SME FINANCE

    The financial scheme to develop non-cash


    payments in VN from 2016 to 2020 (2016) (i)

    The financial scheme to support the national


    innovative startup ecosystem toward 2025 (2016)

    Establishment of Steering Committee in Fintech


    (2017), to assess current fintech ecosystem in VN,
    make recommendations on establishing legal and
    management framework for fintech in VN (ii)
    CHALLENGES OF USING DIGITAL FINANCIAL SOLUTIONS
    TO ENHANCE SME FINANCE
    Insufficient legal framework and policy makers’ expertise in the
    field to ensure inclusive development of the sector
    Low literacy in finance and digital technology, difficult to adopt
    innovative digital financing solutions
    Outdated banking systems in VN prevent the integration of new
    fintech technology solutions into Vietnamese
    The deeply entrenched culture of using cash, great barrier of a
    direct leapfrog from cash to digital instruments
    Lack of SME database for executing alternative non-collateral
    required financing models
    Huge challenge of risk management due to high technology
    crime, limited internet security capacity
    POLICY RECOMMENDATION
    Promote financial inclusion – a comprehensive solution covering
    different aspects of SMEs finance
    Develop a sufficient legal framework, improve expertise and
    capability of digital finance for policy makers so as to boost the
    development and ensure proper operation of the sector

    Promote investment in internet security in order to improve risk


    management capacity and control high technology crime
    Enhance people’s knowledge of finance through promoting
    financial education including training on digital finance
    Encourage banking systems to modernize and invest more into
    banking technology to adapt to digital finance development
    Develop SME database

    You might also like