The International Finance Corporation (IFC), in collaboration with the Swiss Embassy, local authorities, and business stakeholders, has launched the second phase of its supply chain finance (SCF) program in Vietnam. This initiative, supported by a five-million-Swiss Francs grant from the State Secretariat for Economic Affairs (SECO) through 2029, aims to help over 500,000 small and medium-sized enterprises (SMEs) in Vietnam access up to $35 billion in working capital.
Vietnam, one of the world’s most open economies, has about half of its gross domestic product (GDP) and every second job tied to exports. However, local suppliers and exporters face significant challenges due to working capital constraints. Typically, businesses only receive payments 30 to 60 days after delivering goods, which limits their ability to accept larger orders and develop new business relationships. According to a recent World Bank survey, fewer than one in five Vietnamese firms were connected to global value chains in 2023.
Access to SCF can alleviate these financial constraints by converting sales receivables and inventories into cash, reducing funding costs, and accelerating trade cycles. This process helps firms strengthen their linkages to global value chains, while also enabling them to invest in key areas such as research, development, technology, and skills.
“We estimate that the first phase of the program has unlocked over $30 billion in capital for around half of Vietnam’s SMEs,” said H.E. Thomas Gass, Swiss Ambassador to Vietnam. “By providing financial support to these businesses, the program has not only helped SMEs thrive but also contributed to the broader economy, fostering a more inclusive and sustainable marketplace.”
Launched in 2018 with SECO support, the IFC’s Vietnam SCF Program has been addressing persistent market barriers that hindered SCF growth. The program focuses on three key components: creating an enabling environment for SCF, improving institutional readiness, and increasing market demand and awareness. Over the past five years, it has led to improved movable finance regulations, provided strategic SCF advice to four banks, and facilitated up to $33 billion in receivables and inventory financing for 500,000 SMEs.
“The State Bank of Vietnam, in partnership with IFC and SECO, will continue to review and adjust regulations to create a more favorable environment for SCF. This includes refining rules for e-financing platform lending and encouraging financial institutions to diversify their offerings, ultimately enhancing credit access for SMEs,” said Deputy Governor Nguyen Ngoc Canh.
The second phase of the program, which will span the next five years, will focus on further developing the legal and regulatory framework for SCF in Vietnam. The partnership will work to enhance the institutional capacity of lenders, enabling them to offer comprehensive SCF solutions to local SMEs. A key priority will also be to build the SCF knowledge and capacity of both buyers and local suppliers, thereby increasing the adoption of supply chain finance.
“Trade is a crucial driver of Vietnam’s economy and will be central to the country’s goal of reaching high-income status by 2045. IFC is proud to collaborate with SECO and our bank partners to help stimulate the market for supply chain finance, which will play an integral role in the financial ecosystem for SMEs,” said Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia, and Lao PDR.
About IFC
The International Finance Corporation (IFC), a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Operating in over 100 countries, IFC leverages its capital, expertise, and influence to create markets and opportunities in developing nations. In fiscal year 2024, IFC committed a record $56 billion to private companies and financial institutions in developing countries, utilizing private sector solutions and mobilizing private capital to create a world free from poverty and environmental degradation.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Qilu Bank Enhances Support for Small Businesses with Innovative Financial Tools
- Bitcoin Poised for a Surge Amid Gold’s Delivery Delays, Expert Claims
