The scale of supply chain finance activities in Vietnam reveals many limitations.
According to Dr. Can Van Luc - member of the National Financial and Monetary Policy Advisory Council, the total outstanding credit balance for agriculture and rural areas at the end of 2023 was 3.3 million billion VND, accounting for 24.3% of the total outstanding credit balance for the economy. Particularly, loans for agriculture, forestry and fishery reached 986,000 billion VND at the end of June 2024.
The scale of supply chain finance activities in Vietnam has revealed many limitations that have not met development requirements. While import-export turnover has increased quite well (about 10%/year in the period 2013-2023), the scale of supply chain finance activities is still very small. In 2023, commercial banks (CBs) will only provide trade finance for 20% of total import-export turnover; of which, supply chain finance accounts for only 2%. The main suppliers are still commercial banks, and financial companies have not participated much.
Supply chain finance (SCF) products have many barriers for farmers to access. That is, commercial banks often require collateral, while trade finance products including receivables finance, invoice finance, shipment finance, etc. are rarely applied due to their risky nature.
According to Dr. Can Van Luc, financial companies have not participated much in the market, making the supply dependent on commercial banks. Enterprises, especially small and medium enterprises and agricultural enterprises, are still limited in management, financial and technological capacity.
In addition, there are not many platforms connecting suppliers, distributors, financial providers and other support services.
According to Dr. Can Van Luc, to overcome the above limitations, it is necessary to complete the legal framework and speed up the progress of building a legal corridor for new business models such as peer-to-peer lending and data sharing mechanisms.
At the same time, it is necessary to summarize, evaluate and have a plan for agricultural insurance. Continue to develop the capital market, especially the corporate bond market. Complete the information system, forecast data on the market and agricultural product prices to help farmers and businesses have a stable production and consumption orientation.
Dr. Can Van Luc said that Vietnam needs to have a marketing strategy and expand the agricultural export market, focus on building brands, take advantage of new generation FTAs, and be determined to remove the EU yellow card. People's Committees of provinces and cities should speed up the process of issuing certificates of land use rights and property ownership (especially properties such as greenhouses, net houses, ponds, etc.).
On the side of supply chain finance service providers, it is necessary to design suitable products with more flexibility in terms of collateral. Large commercial banks with advantages in resources and customer base can build a platform connecting members in the supply chain, proactively seek and work with international organizations to have capital for supply chain finance.
According to Dr. Can Van Luc, agricultural enterprises need to proactively learn about supply chain financing solutions and benefits, increase information transparency to be able to access supply chain financing products in particular and financial services in general, proactively research to shift to green agriculture, sustainable development to be able to access domestic and foreign capital sources for this field.
At the forum, Mr. Ngo Sy Dat - Director of the Institute for Agricultural Market and Institutional Research, highlighted the role of cooperatives in the agricultural production process. Cooperatives have the strength of having a nationwide network, creating valuable agricultural products, creating jobs, and increasing income for people. Cooperatives are the focal point for receiving technology transfer, State policies and agricultural extension resources, infrastructure works serving production and business, insurance for farmers, supporting disadvantaged areas, mountainous areas, and ethnic minorities.
Currently, the country has 2,169 cooperatives as the owners of OCOP products; more than 1,000 cooperatives have community tourism activities, creating jobs and income for members (average income of 52 million VND/year), contributing to local political and social stability.
Referring to solutions to promote agricultural value chain linkages, Mr. Ngo Sy Dat proposed that the State should pay more attention to training and fostering cooperative human resources, continue to support cooperative start-up programs; access to credit loans, land... Especially, expanding the cooperative model of both production and market participation (agricultural product trading floors); cooperatives fishing at sea; protecting community resources...; cooperatives producing OCOP products associated with rural tourism.
On the part of agricultural enterprises, cooperatives need to proactively learn about supply chain financing solutions and benefits. Increase information transparency to be able to access SCF products in particular and financial services in general. Proactively research to shift to green agriculture, sustainable development to be able to access domestic and foreign capital for this sector.
Hanoi implements many solutions, focusing on organizing production and linking product consumption.
In Hanoi, the report of the Department of Agriculture and Rural Development shows that Hanoi is one of the localities with a large agricultural land area, with more than 197,000 hectares, of which agricultural land is nearly 160,000 hectares. In recent times, the Department of Agriculture and Rural Development of Hanoi has coordinated with localities to increase the application of science and technology in production, implement growing area codes, ensure traceability, quality and food safety.
Along with that, Hanoi has been accumulating and concentrating land for large-scale, high-tech development, creating conditions to attract businesses to invest in agricultural production; strengthening the connection between businesses, cooperatives, cooperative groups and households to organize agricultural production according to VietGAP, GlobalGAP, organic standards and models combining agricultural tourism. Thanks to that, Hanoi's agricultural production value has achieved high growth and proactively supplied a part of clean, safe agricultural products to consumers in the capital.
Currently, Hanoi's agricultural production is facing many difficulties and challenges. The restructuring of the agricultural economy is still slow, not commensurate with the potential and advantages of the capital. Agricultural production is still small and fragmented, and concentrated production areas with the nature of spearhead commodity production have not yet been formed. Investment attraction in agriculture is still low, and the chains linking production to product consumption are newly developed...
To maintain the growth rate, Hanoi's agricultural sector is implementing many solutions, focusing on organizing production and linking product consumption. Hanoi's Department of Agriculture and Rural Development said that Hanoi is developing specialized agricultural areas associated with brand building and tourism development, aiming to increase production value.
Hanoi also chooses to invest systematically in specialized agricultural models, suitable to the local land accumulation capacity. In addition, Hanoi also forms high-quality seedling areas (fruit trees, ornamental flowers, urban trees, etc.), meeting the requirements of green urban development of the capital and neighboring provinces and cities. Agricultural production areas invested in technology and finance will become centers of high-tech agriculture and sustainable ecological agriculture.
Source: https://kinhtedothi.vn/tim-giai-phap-nang-cao-hieu-qua-san-xuat-thu-nhap-cho-nong-dan.html
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