The event was attended by representatives of the International Finance Corporation (IFC) and the World Trade Organization (WTO), Vietnamese policymakers, and commercial banks.
According to representatives of IFC and WTO, improving access to trade finance at reasonable costs could increase Vietnam’s import and export turnover by six and nine percent, representing an annual increase of the total trade value of goods of US$55 billion.
However, Vietnam's trade finance is not popular yet and dispersed as well as has high costs and provides basic business. In 2022, domestic banks supported only 21 percent of the country's total import-export turnover of US$731 billion. Banks mainly support domestic enterprises participating in regional trade rather than large multinational companies involved in global trade.
Because Vietnam's domestic trade finance is currently concentrated in domestic manufacturers, expansion of the coverage of trade finance will help improve the competitiveness of Vietnamese importers, promote production, and strengthen integration into the global supply chain, said Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia, and Laos.
According to importers and exporters, they do not receive support from banks due to high collateral requirements and complicated appraisal processes. On the supply side, in 2022, Vietnamese banks rejected an average of 12 percent of trade finance requests, mainly from small and medium-sized enterprises, equivalent to about US$20.3 billion of unmet demand. The reason for rejections is the lack of collateral and high credit risk.
To increase the number of businesses receiving trade finance, it needs to complete legal frameworks to address requirements on collateral, digital transactions, central bank conditions, and accountability framework as well as raise awareness of small and medium-sized enterprises and domestic suppliers on how to access trade finance, experts said at the workshop.
