Developing in step with rural youth

At a recent online roundtable, discussing the credit policy for minority ethnic groups and the youth with regards to economic development, co-organised by Vietnam Bank for Social Policies (VBSP) and Youth Newspaper, Le Ngoc Khanh, deputy director of the Development Centre for Rural Youth under the Ho Chi Minh Communist Youth Union Centre, said that the Youth Union is currently managing 24,233 savings and credit units across districts, communes, and villages nationwide.

The total outstanding credit under the management of the Youth Union is currently recorded at VND21 trillion ($954.5 million), with loans approved for 845,420 households, some 40-folds higher than when VBSP was established in 2002.

Walking in step with the underprivileged youth on their path to a career, the policy bank in conjunction with the Youth Union has co-ordinated and implemented many preferential credit programmes in areas in need and great difficulty.

The young people have then been able to gain access to preferential funds in a bid to pay for their continued education in high school or university, to get on with a career and invest into a small business to ultimately help their hometowns to flourish. In the past 15 years, this very source of funding has assisted millions of young villagers to improve their financial stances and lives.

This was the case of Nguyen Ngoc Triu (35) from My Thuan commune, Tan Son district in Phu Tho province, who was able to borrow to improve his family’s finances. With a little savings accumulated over the years (he had been working at Tan Phu Tea Factory in Phu Tho) and the preferential funds borrowed from VBSP, Triu and his wife were able to start a small tea farm.

Nguyen Ngoc Triu and hiw wife at the family tea processing business

In 2009, with an additional interest-free loan of VND5 million ($227), his family expanded their farm to grow more tea plants. A year later, he applied for another VND15 million ($682) loan to purchase a tea grinder. Apart from looking after the tea farm, he and his wife also collected the tea leaves in the village, then ground them up and processed them into final products to sell in the market.

Up to this point, his family processes some 6-7 tonnes of fresh tea leaves each month, earning approximately VND200 million ($9,090) a year.

Out of the 6.7 million loan customers at VBSP, 1.4 million are recorded to be under the age of 35, taking up some VND37.13 trillion ($1.68 billion) in outstanding loans or 21.8 per cent of the total. Most of the loans are then invested into production and business development.

Deputy director of the VBSP Credit Department Nguyen Manh Thien noted that while there has not been a specific loan programme designed for the young to start business, the bank has numerous other programmes for which they can enrol and apply for. There are the preferential credit programmes for the poor, for those who need funds to start a business, for businesses and businesspeople in difficulty, and for small- and medium-sized enterprises (SME).

Meanwhile, VBSP deputy director for Student Loans Dinh Mai Phong shared that under Decree No.61/2015/ND-CP, the young people looking to start a small or micro-business are eligible for loans through the National Employment Fund.

To qualify for such loans, these businesses must meet certain conditions including a feasible business plan that suits the province’s production and business lines, as well as creating more jobs with a sustainable development plan. In addition, the project must also be certified by a competent agency or organisation where it is registered and a loan guarantee in accordance with the current regulations.

According to Thien, the maximum amount of loan available to the poor is VND50 million ($2,272) a month. Some customers have stressed that the limit has not actually met the borrowing demand. VBSP has thus been revising the policy to raise the limit, and is going to submit a new loan limit to the appropriate authorities for approval.

In 2014, the VBSP Board of Directors increased the lending limit from VND30 million ($1,363) to VND50 million per household in an attempt to meet the demand for loans for business and production.

VBSP, in the years to come, is committed to continue rolling out various preferential credit programmes to the youth—the future generation that hold the knowledge, creativity, and will for a stronger and brighter future.

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