VietNamNet Bridge – Nguyen Dong Tien, deputy governor of the State Bank of Viet Nam, talks with the Nong thon ngay nay (Countryside Today) newspaper on measures to settle difficulties that will help farmers attain credit.

Last year the State Bank of Viet Nam (SBV) issued many policies for agriculture and rural development that so that farmers have a chance to access loans. Could you comment on the effectiveness of these policies?

The State Bank of Viet Nam identified agriculture, rural areas and farmers as its priorities for capital development. Last year, the SBV has advised the government to issue many policies to support people to access bank loans, such as Decree No 55 on credit policies for agricultural and rural development (which replaced Decree No 41)

The central bank has actively implemented credit policies in Decree 67 and coordinated with other ministries and agencies in suggesting the Government issue Decree No 89 on amending and supplementing some articles of Decree 67 to remove obstacles in the implementation of policies to support fishermen building and upgrading offshore fishing vessels.

Foreseeing the difficulties of coffee farmers in the replanting of old coffee gardens, the central bank has proactive worked with related agencies to promulgate policy to provide loans for replanting coffee plants in Central Highlands provinces which was submitted to the Prime Minister for approval in March last year.

In the 2014-20 period, the government will set aside between VND12-15 trillion (US$539-674 million) to support farmers and businesses in replanting coffee plants in the Central Highlands provinces in accordance with a plan approved by the Ministry of Agriculture and Rural Development.

In addition, the central bank has continued implementing credit policies to support the country's key agriculture products like rice and aquatic products.

Besides a pilot lending programme for the development of integration schemes, the application of advanced techniques in agriculture has initially formed models in agricultural production. The application of advance technology at localities has helped push up the economic restructuring and the implementation of restructuring the agricultural sector.

What are reasons that make it difficult for farmers to access preferential loans?

The banking system has always identified investment for agriculture, farmers and rural areas as priority areas. However, investment using credit loans in the agriculture sector hasn't been effective due to a number of obstacles.

First, agricultural production always confronts risks such as natural disasters and epidemics which have a strong influence on the production efficiency of farmers, businesses and investment of the banking sector. But there are no insurance instruments to prevent and limit the risks.

In the context of Viet Nam's World Trade Organisation membership and its participation in regional and international trade agreements, the agricultural products of Viet Nam can compete globally but its economic value is not high due to small scale production.

Second, the planning and management of agricultural product development has not been well-organised, leading to a contradiction that despite bumper crops, farmers are facing hardships caused by severely dropping prices.

The situation happens frequently, affecting incomes and livelihoods of farmers thereby making enterprises, people and credit institutions vigilant in investment in the sector.

Third, the trading competence and marketing knowledge of farmers, co-operatives and enterprises are limited.

What are the efforts of the banking sector in the implementation of the government decrees to pour capital in agriculture, aquaculture and rural areas?

The implementation of policies to support people building or upgrading offshore fishing vessels following the government's Decree 67 has faced a number of difficulties, such as problems relating to the approval of the list of eligible ship-owners, the ship form and evaluation of ships. The limited number of ship building facilities and the big investment in steel hulls also affected the capital investment of banks.

The government also issued Decree No. 89 amending and supplementing some articles of Decree No. 67 to remove difficulties and obstacles in the implementation of Decree 67.

The lending for ship owners has recently accelerated. The number of credit contracts for upgrading or building ships has increased dramatically from 75 in mid-May to 271 by the end of November last year.

Besides issuing guidance documents, the SBV has also instructed commercial banks to strengthen the dissemination of information to ensure people and businesses grasp the policy of the Government. The central bank has required banks to continue simplifying procedures to create favourable conditions for people to access credit loans following Decree 55 and Decree 67 of the Government.

In the coming time, the central bank will continue to closely co-ordinate with ministries, agencies and localities to promptly solve the difficulties and problems arising in the process of implementing the Government's policies, help people access credit resources in the most comfortable way.

VNS