16:38 | 17/06/2016 Economy
The Asian Development Bank (ADB) and Orient Commercial Joint Stock Bank (OCB) have signed an agreement under which ADB’s Trade Finance Program (TFP) will provide guarantees of up to US$20 million a year to support trade in Vietnam.
Vietnam's small- and medium-sized enterprises will receive supports from the ADB's trade sponsorship program
OCB’s participation means the TFP now has 12 bank partnerships in Vietnam. Under this agreement, ADB and OCB will support exporting and importing companies, including small- and medium-sized enterprises, according to ADB’s press release issued on June 15.
In the past few years, Vietnam has consistently been one of the top five most active among the 20 developing markets where the TFP operates. To date, the programme has conducted 4,479 transactions, supporting over US$6.9 billion in trade in Vietnam. Of these, roughly 75% were for trade financing for small- and medium-sized enterprises.
Vietnam’s economic growth has been increasing since 2012. Gross domestic product (GDP) expanded 6.7% in 2015, its strongest in seven years, propelled by a surge in foreign direct investment and export-oriented manufacturing. However, at least 70% of Vietnam’s GDP is generated in cities and serious development challenges remain, particularly in making growth more inclusive. For instance, SMEs’ access to trade finance remains limited with Vietnam’s banking sector not yet as developed as other markets in the region like Malaysia, the Philippines, or Thailand. As such, international banks have little to no desire to take risks on Vietnamese banks.
The TFP will conduct workshops and seminars to increase knowledge and expertise on trade finance, which should result in more support to exporting and importing companies in Vietnam./.