ASEAN KEY DESTINATIONS
WB arm helps improve Vietnam’s credit access
A World Bank arm will use improved and secure lending measures to help the National Registration Agency of Secured Transactions (NRAST) increase access to finance in Vietnam, reported Vietnam News Agency (VNA) on Tuesday.
The recent signing of an agreement by the International Finance Corporation (IFC) marks the start of a second phase of technical assistance, running from this month to December 2009, that will target further legal reforms at the secured transactions registry and support the procurement, set-up, and management of the nation’s first web-based registry system.
Poor access to credit has significantly constrained private sector growth in Vietnam.
The lending environment has been heavily reliant on collateral while private firms have been restricted from applying for credit because they cannot use moveable assets like equipment, receivables, and inventories as collateral.
IFC, through its Mekong Private Sector Development Facility (MPDF) advisory services programme, has helped the government expand the range of assets to be used as collateral, and helped simplify procedures for creating security interests. MPDF has also helped the Ministry of Justice with the simplification and modernisation of the registration system.
During the first phase, MPDF analysed Vietnam’s lending environment through a survey of the country’s financial sector.
The findings enabled the ministry to better understand the concerns of the country’s lending institutions, as well as the issues facing the private sector in accessing credit.
A second survey will be conducted at the end of Phase II to measure the impact of technical assistance on reforms in the legal framework and registration process.
It will also determine the impact of the operation of the web-based registry on increasing access to credit.
The findings will be used to measure the enforceability of legal and institutional reform, and will also serve as a basis for recommendations for further improvements.
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