Summary of PhD thesis: Bank credit contributes to the development of the agricultural economy in the Mekong River Delta key economic region

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY
----------oo0oo----------

LE PHAN THANH HOA

BANK CREDIT CONTRIBUTES TO THE DEVELOPMENT
OF THE AGRICULTURAL ECONOMY
IN THE MEKONG RIVER DELTA KEY ECONOMIC REGION

SUMMARY OF PHD THESIS

HO CHI MINH CITY – 2018


MINISTRY OF EDUCATION AND TRAINING

STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY
----------oo0oo----------

LE PHAN THANH HOA

BANK CREDIT CONTRIBUTES TO THE DEVELOPMENT
OF THE AGRICULTURAL ECONOMY
IN THE MEKONG RIVER DELTA KEY ECONOMIC REGION

SUMMARY OF PHD THESIS

Major: Finance and Banking
Code: 9 34 02 01

Science Instructor: PROF., DR. NGUYEN THANH TUYEN

HO CHI MINH CITY – 2018


LIST OF AUTHOR’S PUBLICATION
No.

Contents

1

Lê Phan Thanh Hòa (2018), Vốn tín dụng Ngân hàng Chính sách xã hội góp
phần thúc đẩy chuyển dịch cơ cấu nông nghiệp – nông thôn vùng đồng bằng
sông Cửu Long theo hướng phát triển bền vững, Tạp chí Ngân hàng, số 9,
tháng 05/2018, trang 33-37.

2

Lê Phan Thanh Hòa (2018), Vận dụng lý luận của Chủ nghĩa Mác trong phát
triển kinh tế nông nghiệp tiếp cận Vùng kinh tế trọng điểm ở Đồng bằng sông
Cửu Long, Kỷ yếu hội thảo khoa học Các Mác và thời đại ngày nay do Đại học
Quốc gia TP. HCM, Đại học Khoa học Xã hội và Nhân văn, Đại học Kinh tế Luật, TP. HCM, trang 236.

3

Lê Phan Thanh Hòa, Nguyễn Văn Phận, Nguyễn Khắc Minh (2017), “Bàn về

vai trò của tín dụng ngân hàng trong phát triển chuỗi giá trị nông sản tại Việt
Nam”, Tạp chí Ngân hàng, số 5, tháng 03/2017, trang 44-48.

4

Lê Phan Thanh Hòa, Nguyễn Đắc Hưng, Lê Phan Thanh Hiệp (2016), “Vai trò
của doanh nghiệp tư nhân trong lĩnh vực ngân hàng là động lực phát triển hệ
thống tài chính”, Kỷ yếu hội thảo khoa học cấp quốc gia: Văn kiện đại hội XII
của Đảng: Một số vấn đề lý luận và thực tiễn, Phần thứ hai: Quán triệt, vận
dụng quan điểm của Đại hội XII vào thực tiễn do Học viện Hành chính Quốc
gia Hồ Chí Minh phối hợp với Bộ biên tập Tạp chí Cộng sản và Viện Hàn lâm
Khoa học Xã hội Việt Nam tổ chức, Hà Nội, trang 217-225.

5

Lê Phan Thanh Hòa, Nguyễn Đắc Hưng (2013), “Cần tiếp tục có các giải pháp
đồng bộ cho mở rộng tín dụng ngân hàng thúc đẩy phát triển bền vững kinh tế xã hội vùng đồng bằng sông Cửu Long”, Kỷ yếu hội thảo: Hoạt động tín dụng
ngân hàng thúc đẩy phát triển kinh tế - xã hội vùng đồng bằng sông Cửu Long
do Ngân hàng Nhà nước Việt Nam phối hợp với Ban chỉ đạo Tây Nam Bộ và
Ủy ban nhân dân tỉnh Vĩnh Long tổ chức, Vĩnh Long, trang 200-213.

6

Lê Phan Thanh Hòa, Nguyễn Đắc Hưng, Lê Phan Thanh Hiệp (2013), “Vốn tín
dụng góp phần chuyển dịch cơ cấu kinh tế vùng Đồng bằng Sông Cửu Long”,
Tạp chí Kinh tế và Dự báo, số 18, tháng 09/2013, trang 19-21.

7

Lê Phan Thanh Hòa, Nguyễn Đắc Hưng (2013), “Giải pháp mở rộng vốn tín

dụng ngân hàng cho phát triển bền vững kinh tế - xã hội vùng Đồng bằng sông
Cửu Long”, Tạp chí cộng sản, tháng 12/2013, truy cập tại
/>

No.

Contents

8

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2013), “Để phát triển thị trường trái
phiếu ở Việt Nam”, Tạp chí Kinh tế và Dự báo, số 22, tháng 11/2013, trang 2325.

9

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2013), “Hoạt động M&A trong quá
trình cơ cấu lại các ngân hàng thương mại”, Tạp chí Kinh tế và Dự báo, số 17,
trang 12-14.

10

Thành viên đề tài nghiên cứu khoa học cấp trường “Nghiên cứu hành vi của
nhà đầu tư cá nhân trên thị trường chứng khoán Thành phố Hồ Chí Minh dựa
vào lý thuyết tài chính hành vi” (2012), Trường Đại học Ngân hàng Tp.HCM,
Chủ nhiệm đề tài Lê Đình Hạc.

11

Thành viên đề tài nghiên cứu khoa học cấp trường“Đánh giá khả năng đáp ứng
nhu cầu vốn của ngân hàng thương mại trên địa bàn Thành phố Hồ Chí Minh

đến năm 2020” (2011), Trường Đại học Ngân hàng Tp.HCM, Chủ nhiệm đề tài
Nguyễn Thế Bính.

12

Lê Phan Thanh Hòa (2011), “Nâng cao năng lực cạnh tranh cho các doanh
nghiệp nhỏ và vừa khu vực Đồng bằng sông Cửu Long trong hội nhập”, Kỷ yếu
hội thảo: Thực trạng và các giải pháp nâng cao năng lực cạnh tranh cho các
doanh nghiệp nhỏ và vừa trên địa bàn Thành phố Cần Thơ do Trường Đại học
Ngân hàng Tp.HCM phối hợp với UBND Thành phố Cần Thơ tổ chức, Cần
Thơ, trang 122-127.

13

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2011), “Hoàn thiện cơ chế điều
hành lãi suất ngân hàng ở Việt Nam”, Tạp chí Công nghệ Ngân hàng, số 67,
tháng 10/2011, trang 39-43.

14

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2011), “Quản lý vốn khả dụng của
ngân hàng thương mại tại Ngân hàng Nhà nước”, Tạp chí Công nghệ Ngân
hàng, số 68, tháng 11/2011, trang 15-19.

15

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2011), “Hoàn thiện cơ chế điều
hành lãi suất tín dụng ngân hàng ở nước ta trong giai đoạn hiện nay”, Tạp
chí Phát triển kinh tế, số 253, tháng 11/2011, trang 49-56.

16

Lê Phan Thanh Hòa (2011), “Rủi ro tín dụng và kinh nghiệm quốc tế về quản
lý rủi ro tín dụng”, Tạp chí Ngân hàng, số 9, tháng 05/2011, trang 37-41.


1

ABSTRACT
This thesis researchs about the missing of the capital for developing the agricultural economy in the Mekong
River Delta (MRD) key economic region (KER) which is the urgent problem both of theory and practice
nowadays. The target researchs of this topic are aggregating and adding contribute to the theory on
strengthening bank credit for developing the agricultural economy, proposing the effective solutions about
strengthening bank credit for developing the agricultural economy in the MRD KER. Qualitative research
method is primary, and it combines with the descriptive statistical method which bases on the factual
surveys. The research result points out that bank credit for developing the agricultural economy in the MRD
KER is not strong enough, not much enough, not tigh enough; it’s fragmented and lack of focus so that it
can’t create a capital breakthrough for the development of agricultural economy in the KER. There are many
solutions, ways of providing bank credit for developing the agricultural economy but they are not completely
fit in the new conditions such as, the impact of industrial revolution 4.0, new demand for agricultural
products, climate change is getting deeper and deeper. Therefore it requires a new approach of bank credit in
developing natural, organic, ecological, and high-tech agriculture. The new contributions of this thesis are:
new approach of agricultural economy development and strengthening bank credit in new conditions.
Introducing new concepts are agricultural economys, the agricultural economy in the KER, agricultural
economy bank credit, strengthening the bank credit for developing the agricultural economy, and the
indicators reflect the strengthening of the bank credit,... The practical contribution is introducing the new
solutions such as formalizing informal credit; stopping spread loans, focusing on lending new technology
agricultural economy, especially high technology; focusing on the agricultural economy loans of “the key
economic infrastructure project”; focusing the totally investment capital on “the key economic infrastructure
project”; establishing agricultural industrial zones; establishing public agricultural economy companies. The

results of this thesis can be used as a reference material for policy-makers and bankers in practice.
Key words: agricultural economy, bank credit, KER, the MRD, strengthen, stronger, more, tighter, credit
solutions, the development of agricultural economy.
INTRODUCTION
1. Scientific basis and reasons of choosing this research topic
MRD has the advantage that is the large agricultural area of Vietnam. Every year, the MRD produces more
than 55% of paddy rice, 69% of fishery output, 70% of fruit production, contributes more than 90% of rice
output, 60% of fishery export output of Vietnam. On April 16, 2009, the Prime Minister issued Decision
492/QD-TTg establishing the KER of the MRD; on Feb 12, 2014, the Prime Minister issued Decision
245/QD-TTg approving the master plan for socio-economic development in the MRD KER up to 2020 with
orientation to 2030; The MRD KER (hereinafter referred to as the KER or Region) will be the dynamic
development zone with modern economic structure, synchronous infrastructure, contributing to building the
MRD rich and strong. One of the urgent issues, however, is that the Mekong Delta and the KER still face
many difficulties in accessing capital, lacking capital for development, with that practice I chose the topic
“Bank credit contributes to the development of the agricultural economy in the MRD KER” as a doctoral
thesis in economics, this research meets the need of both theoretical and practicality.
2. Research overview and research issues
2.1. Research overview
2.1.1. The studies of foreign
2.1.2. The studies in Vietnam


2

2.2. Remaining gaps and research issues
2.2.1. The basic unification of previous studies
2.2.2. Remaining gaps and research issues
First. Remaining gaps in research: - There has been no study which have built systematically about the
theory on agricultural economy development, and bank credit in the new circumstances with the influence of
climate change, water scarcity, invasions salinity, landslides, the impact of new technologies, new

requirements of commodity agricultural markets; - There has been no study how to make breakthrough from
bank credit for contributing to agricultural economy development in the KER; - There has been no
systematically in-depth study on strengthening bank credit for developing the agricultural economy in the
Mekong Delta KER. The remaining gaps will be continued to study with the content bank credit contributes
to the development of the agricultural economy in the Mekong delta KER. The title, purpose, objectives,
content of the thesis are not overlap with other published topics.
Second. Research issues: Why the agricultural economy in the Mekong Delta KER still lack of capital for
development, the KER has not become driving force for economic development. Therefore, researching into
strengthening bank credit for agricultural economy development in the Mekong Delta KER is a new scientific
issue that has the theoretical and practical meanings.
3. Research purposes, research objectives
3.1. Research purposes: Towards making bank credit becomes one of the most effective sources of capital for
agricultural economy development in the MRD KER which contributes to make the KER is really the driving
force for the development of the Mekong Delta and the economy.
3.2. Research objectives
3.2.1. Overall objectives: Researching the situation of bank credit for agricultural economy development in the
MRD KER in the recent time to offer solutions about strengthening bank credit for developing the agricultural
economy in the MRD KER.
3.2.2. Specific objectives: - Aggregating, and adding to contribute to clarify the theory of the agricultural
economy in the KER, and the agricultural economy development in the KER; agricultural economy credit, and
strengthening the bank credit for developing the agricultural economy in the KER which are used to be the
theoretical basis for the research of this topic. - Identifying the existing constraints, the impact factors and the
specific causes that restrict bank credit for agricultural economy development in the MRD KER. - Proposing the
effective solutions to contribute to strengthen bank credit for developing the agricultural economy in the MRD
KER up to 2025 and a vision to 2030.
4. Research questions and research hypotheses
4.1. Research questions
- Whether or not it is necessary to supplement the basic theory on the agricultural economy in the KER, the
theory on strengthening bank credit for developing the agricultural economy in the KER? - Whether or not
there are still certain constraints of bank credit for agricultural economy development in the MRD KER? What are the impact factors and the limited causes of strengthening bank credit for developing the

agricultural economy in the MRD KER? - Whicht solutions and what to do, how to do to strengthen bank
credit for developing the agricultural economy in the MRD KER?
4.2. Research hypotheses
- There have been major changes in production patterns, the impact of climate change, the new demand for
consumption of the market and the impact of the industrial revolution 4.0. It is necessary to make additional
contributions to improve the basic theory on agricultural economys, the KER, strengthening bank credit for


3

developing the agricultural economy in the KER. - In fact, there are still some certainly limitations of bank
credit for developing the agricultural economy which need to be reseached to solve. These restrictions are
due to commercial banks themselves, customers, macro management policies and other unwanted effects. Factors such as small scale production, outdated technology, unstable production, poor asset security,
financial capacity, production management, knowledge of basic financial knowledge,... are factors that limit
access to bank credit capital of farmers in the KER. - If giving the feasible solutions about enhancing internal
banks and boost the power of customers, along with the effective support of macro management,
strengthening bank credit for developing the agricultural economy in the MRD KER can be done.
5. Research object, research scope
5.1. Research object: Researching on strengthening bank credit for developing the agricultural economy in the
MRD KER.
5.2. Research scope:
5.2.1. Scope of space: Researching in the zone of the MRD KER include Kien Giang province, An Giang
province, Ca Mau province, and Can Tho city.
5.2.2. Scope of time: From 2011 to 2017.
5.2.3. Scope of research content: This thesis only researchs bank credit of the branches of the commercial
banks in the MRD KER to develope the agricultural economy of the MRD KER, the major is to mobilize the
idle funds and make the agricultural economy development loans in the MRD KER. Other problems which
are mentioned in this thesis are served for specifying the research purposes, and the research objectives.
6. New contributions of the thesis
6.1. Theoretically: Aggregating, selecting, and adding to contribute to complete the theoretical framework on

strengthening bank credit for developing the agricultural economy in the KER. First build the new concepts of the
agricultural economy, the agricultural economy in the KER; strengthening the bank credit for developing the
agricultural economy in the KER; and the indicators reflect the strengthening of the bank credit for the agricultural
economy development.
6.2. Practically:
- Analyzing and evaluating the current situation of agricultural economys and the situation of bank credit for
developing the agricultural economy in the new conditions that are abnormal climate change, strongly
developing new industry 4.0, changed demands of the market and when old solutions are no longer suitable
completely for agricultural economy development in the KER; the new contributions are also points out that
previous loans are lack of the necessary synchronization, spread loans without the breakthrough needed, lack
of firm steps of bank credit along with other capitals for the agricultural economy development in the KER.
- New solutions are simultaneously concentrated loans make bank credit stronger, focus and more to meet
the needs of reasonable loans. Together with the concentrated investment capital for “the key economic
infrastructure project” are strengthening bank credit have to create a breakthrough in lending, but at the same
time, it must be closely linked with limitation of risk to ensure safety for both borrowers, banks and the
society; giving the indicators evaluate the strengthening of the bank credit; for the agricultural economy
development; the banking credit associated with social responsibility solution...
- The results of this study can be used as reference materials for related fields and as reference basis for
management organizations, actual activists in planning as well as in the agricultural economy development
bank activities.
7. Limitations of the thesis
- Bank credit for agriculture is quite common, so it is difficult to avoid certain duplications in the data. - Due to


4

the lack of the data source and the uniformity unit, mismatched datas including statistics so that it is difficult to
select the data, it has to be collate data sources to get the most reliable data. - Actual survey data is chosen from
a large number of random objects, so there may be restrictions on the absolute accuracy of the primary data.
8. Methodology, research methodology

8.1. Methodology: Thesis uses the materialistic methodology led in research help the research process to be
reviewed, assessed in a comprehensive, specific way and developed.
8.2. Research methodology: Research methodology of this thesis is mixed, but mainly qualitative research,
descriptive statistical method and expert method.
8.2.1. Qualitative research methodology: The thesis uses qualitative research is primarily to approach the
nature of the research problem.
8.2.2. Descriptive statistical methodology:
First. Details of the descriptive statistics research survey data: (i) The thesis has conducted field surveys
with questionnaires for individuals in the field of agriculture, banking ... in the MRD KER. (Table 0.1.
Situation of collecting individual surveys

for each locality in the MRD KER). The content of the

questionnaire consists of two parts: part one is evaluating the degree of influence of the factors on access to
bank credit capital, and part two is evaluating the degree of influence of the elements (in each of the above
factors ) with access to bank credit capital for developing the agricultural economy in the KER. (ii) The
author conducted a survey for 28 experts, scientists through the Experimental Method Vouchers. Personal
questionnaires and expert questionnaires were developed in accordance with the Likert scale with five levels
of impact assessment. Collected data is cleaned, synthesized and processed using software such as Excel and
SPSS. The results from the survey will be used in the study.
Second. Descriptive research datas: - Individual survey form: Survey on the impact of factors on access to
bank credit capital for agricultural development in the MRD KER (Appendix 0.4 of the thesis). - Expert
method form: Survey on the impact of limited causes and solutions on strengthening bank credit for
developing the agricultural economy in the MRD KER (Appendix 0.2 of the thesis).
8.2.3. Expert research methodology
8.2.4. Other research methodologies
9. Research data, research process, research framework
9.1. Research data: Secondary data collects from primary data and materials from the actual survey.
9.2. Research process
Table 0.2. Research process

Step 1

Identifying the topic, on the basis of identifying the issues to study, developing research proposals, hypothesizing and
determining the preliminary answers.

Step 2

Learning, examining summarily the relevant research to determine the remaining gaps in the research, establishing the
basis for confirming the title and content of the research do not overlap with the previous studies.

Step 3

Coleecting secondary datas, design, make questionnaires and carry out actual collection surveys to collect primary datas.

Step 4

Collecting and processing datas.

Step 5

Selecting to build and add theories, building the research theory framework while adding, constructing, expressing some
new concepts before practical changes.

Step 6

Analysis, evaluation, discussion to give and confirm the results of the study.

Step 7

Based on the results of the research to be discussed, solutions and recommendations for policy recommendations and

practical guidance will be presented. (Completion of the dissertation report to the training institution for protection)


5

9.3. Analysis framework in researching
ANALYSIS FRAMEWORK
STRENGTHENING BANK CREDIT
FOR DEVELOPING THE AGRICULTURAL ECONOMY
IN THE MEKONG RIVER DELTA KEY ECONOMIC REGION

RESEARCH PURPOSES, RESEARCH OBJECTIVES

RESEARCH METHODOLOGIES
Qualitative research

Descriptive statistical research

Theoretical on strengthening bank
credit for developing the agricultural
economy in the Mekong River delta
key economic region

Expert research methodology

The current situation of bank credit for
developing the agricultural economy in
the Mekong River delta key economic

SYSTEM OF SOLUTIONS AND RECOMMENDATIONS

-

Solutions for commercial banks
Solutions for customers
Solutions and recommendations for macro management

Chapter 1: The basic theory on strengthening bank credit for developing the agricultural economy in KER
1.1. The basic theory on agricultural economy development in the KER
1.1.1. The concerned primary theories
1.1.1.1. Concept of sustainable development
The concept of sustainable development places demands on socio-economic development in general and on
agricultural economy development as well as bank credit for agricultural economy development needs
positive changes to implement sustainable development.
1.1.1.2. The theory of absolute advantage of A. Smith and the comparative advantage of D. Ricardo
Their theories suggests for the issue of applying to the actual selection of the region which has comparative
advantages in each country to build up and develop the KER for improving the economic of the region and
the economy effectively.
1.1.1.3. Marxist theory of reproduction of social production
The Marx theory on social reproduction indicates the need for investment to carry out agricultural economy
reproduction or agricultural economy development in depth is primary.
1.1.1.4. The theory of balanced development or "growth poles" by A. Hirschman, F. Perrons and G.
Pestane de Bernis
Applying the theory on balanced development in development investment in small-scale agriculture to large
production by focusing investment in key economic areas to create a driving force for the economy.
1.1.2. Basic theory of agricultural economy development in the KER
1.1.2.1. The concept of agricultural, rural
1.1.2.2. The concept of agricultural economy
Agricultural economy is an economic branch of the national economy, which refers to the activities of
agricultural production, agricultural product processing and agricultural services, which are specialized in
producing high quality, friendly, safe, and tied to the market based on new technology, thus creating high

labor productivity and high production efficiency, meeting the high demand for socio-economic efficiency
and ecological environment protection.


6

1.1.2.3. Concept of agricultural economy development in the KER
- Concept of the KER: The KER is a part of the national territory, which may include the boundaries of many
provinces and cities, and the boundaries may change over time depending on the country's socio-economic
development strategy. The KER converges on favorable development conditions and factors with great
economic potentials, acting as a driving force for the general development of the region and the whole country.
- Concept of agricultural economy in the KER: Agricultural economy in the KER is the agricultural
economy, which has a comparative advantage over other places in high-tech agricultural commodity
production, which is an important center for biotechnology transfer, breed, technical services of producing
and processing hi-tech agricultural products for other regions, for the whole country and for export, and
agricultural economy in the KER also makes the KER fastly become a driving force boosting other regions
and the economy developing.
- Concept of agricultural economy development in the KER: Agricultural economy development in the
KER is the development of agricultural economy based on comparative advantage, high technology,
intelligent and high-level human resources, resulting in the growth in both quantity and quality of
commodity agricultural products which are clean, safe, high quality yield, value and high value chain
associated with the actual market, at the same time, ensure the sustainable development of the socioeconomic environment and the ecological environment, justice, form the dynamic zone boosting other
regions and the country's economy developing.
1.1.3. Characteristics of agricultural economy and implications for bank credit
1.1.3.1. High seasonality
1.1.3.2. Productivity is limited by biological attributes, limited quantity of products, hard to maintain,
stockpiles are strongly impacted by the market.
1.1.3.3. Dependent on water source, natural environment and regional nature
1.1.3.4. Land is the main means of production
1.1.3.5. From agricultural production to agricultural economy is often lack of capital

1.1.4. The role of the KER in the economy
1.1.4.1. Providing key products with high competitiveness for the economy and export
1.1.4.2. Job creation for employees
1.1.4.3. Strengthening technical infrastructure for the economy
1.1.4.4. Ship in application, disseminate science and technology to other regions
1.1.4.5. Increasing revenues for the State budget
For the KER, the agricultural economy is strong, the agricultural economy of the KER serves as the basic
role of agriculture but at a higher level, more focused.
1.2. Overview of the theory of banking credit strengthening for agricultural economy development in the KER
1.2.1. Fundamentals of commercial bank credit
1.2.1.1. The concept of commercial bank credit
Commercial bank credit is a type of credit that is either a borrowing or a property transaction in the economy
between a bank transferring a certain amount of property to the borrower under the commitment of the
borrower must repay both capital and interest unconditionally to the bank on the basis of the agreement of
the parties through commercial banking operations.
1.2.1.2. The essence of commercial bank credit
The nature of bank credit is showed in the movement process of credit in the economy through three key stages:
[i] the loan period [ii] using the loan and [iii] the loans and interest repayment period. So the nature of bank


7

credit is expressed in terms of its credibility, timing and repayment. Reimbursement is characteristic of the
nature of credit movement, which is a hallmark to distinguish credit categories from other economic categories.
1.2.1.3. The role of bank credit in the economy
- Promoting the process of accumulation and concentration of capital, providing capital to maintain the
business process continuously and contributing to investing for economic development. - It is a funding tool
for underdeveloped economic sectors and promoting the key industries of the country. - Contributing to
impacting the enterprises on enhancing the economic accounting regime for efficient use of capital to
improve operation efficiency. - It is an important tool in organizing the improvement of people's lives. Contributing to facilitating the development of economic relations with foreign enterprises.

1.2.1.4. Classification of bank credit
Classifying bank credit so that there are appropriate management practices for each type of credit.
1.2.2. The basic theory of credit strengthening for agricultural economy development
1.2.2.1. Concept of agricultural economy credit
Agricultural economy credit is a commercial bank credit used to refer to a credit relationship in which the
relationship is mainly between the commercial banks and the parties involved in agricultural economy
production and business to satisfy capital needs for production and business in a certain period of time as
agreed between the commercial bank and the borrower with the commitment of the borrower to repay the
principal and interest to commercial banks (lenders) unconditionally through commercial banking operations.
1.2.2.2. The concept of credit strengthening for agricultural economy development
The concept of credit strengthening for agricultural economy development in this study is understood as:
Agricultural economy credit strengthening is commercial banks which are able in fact to implement in a
purposeful manner of meeting credit needs for agricultural economy production and business purposes of
every subject in the economy whom meets the prescribed conditions fastly, spaciously, focusedly, strongly,
tighterly for the purpose of promoting the agricultural economy development.
The intension of agricultural economy credit strengthening includes: (i) Strengthening the bank's capital to
increase the ability to fully and promptly meet capital demands of subjects in the economy in terms of both
quantity and number of loans. (ii) Increasing more concentration, more strength and more tightness to ensure
the safety and efficiency of credit. (iii) Strengthening the transaction point, expanding the area of operation
to bring the bank closer to customers, helping the transactions happen quickly, conveniently, safely, cost
savings. (iv) Strengthening the number of borrowers based on the basis of ensuring compliance with bank’s
lending regulations to control credit risk. (v) Strengthening banking services related agricultural economy
credit to be able to provide customers with one or a complete set of banking products and services
throughout their agricultural economy process of production and bussiness business.
1.2.3. Characteristics of agricultural economy credit
1.2.3.1. High seasonal loans
1.2.3.2. Dependent so much on the market loans
1.2.3.3. Complex, regional and highly dependent on natural loans for production organization
1.2.3.4. Dependent on primary land collateral loans
1.2.3.5. Loans of production that products are essentially limited by biological attributes

1.2.3.6. The cost of the loans is high
1.2.3.7. Requiring bank staffs have knowledge of agricultural economy sector
1.2.4. The role of bank credit in agricultural economy development in KER
1.2.4.1. Contributing to promoting the reasonable movement of agricultural economy structure in the KER


8

1.2.4.2. Contributing to equipping new technology and techniques for the agricultural economy in the KER
1.2.4.3. Contributing to promoting the development of agricultural economy infrastructure in the KER
1.2.4.4. Contributing to boosting the training of human resource development in the key agricultural
economy region
1.2.4.5. Contributing to developing the market
1.2.5. Indicators reflect agricultural economy credit strengthening
1.2.5.1. Group of indicators reflect credit size
(i) Borrowed customers expanding indicators, formula [1.1]; (ii) The growth of agricultural economy
outstanding loans, formula [1.2]; (iii) The growth rate of agricultural economy outstanding loans, formula
[1.3]; (iv) The proportion of agricultural economy outstanding loans, formula [1.4].
1.2.5.2. Group of indicators reflect credit structure
(v) Structure of outstanding loans divided by lending profession sector, formula [1.5]; (vi) Structure of
outstanding loans divided by the duration of loan, formula [1.6] and [1.7]; (vii) Structure of outstanding
loans divided by economic sectors, formula [1.8]; (viii) Structure of outstanding loans divided by the type of
customers, formula [1.9].
1.2.5.3. Group of indicators reflect credit quality
(ix) Bad debt ratio indicator, formula [1.10]; (x) Debt collection coefficient indicator, formula [1.11]; (xi)
Credit capital turnover indicator, formula [1.12].
1.2.6. Asymmetric information and factors affecting credit strengthening for agricultural economy development
1.2.6.1. Apply asymmetric information theory in credit market
Authors who are well-known with asymmetric information theory include George Akerlof, Michael Spence
and Joseph Stiglitz. Asymmetric information theory indicates the two most common behaviors occurring as a

result of asymmetric information, namely: [i] adverse selection, adverse selection is the action that occurs
before signing the contract of the party who have more information and that may harm the less informed
party; [ii] moral hazard, moral hazard is the act of the more informed party make after signing the contract
that may harm the less informed party. In fact, in the credit market, banks are always the ones who have less
information about the project and the purpose of using loans than customers.
1.2.6.2. Factors limiting access to credit and effecting bank credit strengthening
- First. Group of credit policy of the bank. - Second. Group of property and own property. - Third. Group of
factor of income or financial capability. - Fourth. Social capital or relationship and taking participation in
social work. - Fifth. Knowledge of financial. - Sixth. Group of demographic factors. - Seventh. Group of
other factors and external conditions.
1.3. Limiting the risks of bank credit strengthening for agricultural economy development
1.3.1. The concept of bank credit risk
Bank credit risk is the risk of losing a part of the bank's loan capital as the borrower fails to fulfill the
obligation to repay both of principal and interest of the loan in accordance with the commitment.
1.3.2. Identifying the potential risks in strengthening bank credit for agricultural economy development
1.3.2.1. The potential risks from the banks
Risks from commercial banks are basically operational risk, moral risk, tool risk.
1.3.2.2. The potential risks from the customers
Due to weaknesses in capacity, organization level, production and business management, the use of loans is
often ineffective, usustainable, easy to fall into losses... Don’t exclude cases where the customer intentionally
used capital for the the wrong purposes, even the lack of repayment goodwill, deliberately appropriated the loans.


9

1.3.2.3. The potential risks from other causes
The risks comes from macro policies because of sudden change or slow change leading to stagnation, due to
the instability of the economy, the fluctuation in politics and society at home and abroad, the fluctuation in
interest rates, exchange rates, high inflation or deep deflation, risks from natural disasters, risks due to
seasonal factors, market risks...

1.4. Lessons learned from some countries on strengthening bank credit for agricultural economy development
1.4.1. Specific lessons learned from a number of countries
1.4.1.1. Lessons learned from Thailand
1.4.1.2. Lessons learned from Malaysia
1.4.1.3. Lessons learned from Indonesia
1.4.2. Lessons learned referring to bank credit strengthening for agricultural economy development in
Vietnam and the KER
Conclusion Chapter 1
The thesis synthesized the basic theory on strengthening bank credit for agricultural economy development
in the KER. This refers to the basic theory of for agricultural economy development in the
KER. The new concepts are introduced include: concept of agricultural economys, concept of the
agricultural economy development in the KER.
agricultural economy credit, strengthening the bank credit for developing the agricultural economy in the
KER, and the indicators reflect the strengthening of the bank credit for the agricultural economy
development. Characteristics of agricultural economy and the impacts on bank credit. Describe the role of
the KER in the economy. Theoretical part of banking credit strengthening for agricultural economy
development in the KER has been concentratedly clarified as commercial bank, concept, characteristic, role
and classification of bank credit. The basic theory of bank credit strengthening for developing the
agricultural economy was presented, in which the new concepts are first introduced by the thesis include,
concept of agricultural economy credit, concept of credit strengthening for the agricultural economy
development, characteristics of agricultural economy credit, the role of bank credit for agricultural economy
development in the KER; the indicators reflect agricultural economy credit strengthening. Content of
asymmetric information and factors limiting access to credit and affecting credit strengthening for
agricultural economy development are presented as the basis for developing a real survey questionnaire on
the limitations, the limited causes of bank credit strengthening for agricultural economy development. This
thesis mentioned the content of credit strengthening for agricultural economy development should be closely
linked with strengthening to limit the credit risk. The thesis mentioned the lessons learned have reference
valuable for Vietnam and the KER from some countries in the region for bank credit strengthening for
agricultural economy development as Thailand, Malaysia, Indonesia.
Chapter 2: Bank credit situation for agricultural economy development in the KER of the MRD (2011 - 2017)

2.1. Socio-economic situation of the KER of the MRD – the impacts effect on bank credit strengthening
2.1.1. Overview of socio-economic of the MRD
The MRD is the largest agricultural production center in Vietnam, accounting for 12% of the total area and
19% of the national population, and have the advantage natural conditions for developing agriculture,food
processing industry, tourism, renewable energy. It annually contributes 50% of rice production, 65% of
aquaculture production and 70% of fruits of all the country; 95% of rice and 60% of export fish output.
In general, the MRD has great potential for agricultural development, agricultural product processing


10

industry, and has the most difficult is the impact of climate change, lack of high-level human resources, the
medical culture is still low, the transportation has lots of limit, they are both favorable and obstacles impacts
to the development process.
2.1.2. Socio-economic characteristics of the MRD economic region - implications for bank credit
2.1.2.1. The formation of the MRD KER
On April 16, 2009, the Prime Minister issued Decision No. 492/QD-TTG approving the project on
establishment of the MRD KER, including Can Tho city, An Giang province, Kien Giang province and Ca
Mau province, of which Can Tho city is the nucleus of the region. The KER with total area of about 16.589
km2, accounting for about 5% of the country's natural area and 41% of the MRD, is considered to have many
advantages in agricultural economy development.
2.1.2.2. The main socio-economic characteristics of the MRD KER
- First, the population structure and per capita income of the KER in the MRD (Table 2.1: Indicators on
population and per capita income in the KER in the 2011-2016 period). Table 2.1 shows that the population
of the KER increased from 6,278 thousand people in 2011 to 6,415 thousand in 2016, accounting for 36,3%
of the MRD population and 7.1% of the national population. The urban and rural population structure is
35:65. The per capita income of the region is about VND 42 million, lower than that of the whole country.
- Second, labor structure (Table 2.2: Labor force indicators in MRD KER in the period 2011 - 2016). Table
2.2 shows that the average age of laborers aged 15 and over is about 56% -59% of the total population, the
number of employed people aged 15 and over is about 55% -58%, indicating a high employment rate.

However, the proportion of working laborers with vocational training and vocational secondary schools is
low, an average of 9% -13%.
- Third, the status of agricultural land (Table 2.3: Agricultural land structure in the KER as of Dec 31, 2015).
Table 2.3 shows that the region's agricultural land accounts for 87.32% of the total natural area of the region.
In particular, land for planting annual crops accounted for 59.53% of the total agricultural land area; land for
aquaculture is 18,46%; forestry land is 11,94%; perennial crop land is 10.03%. The area of rice cultivation is
largest, accounting for 58.17% of agricultural land area.
- Fourth, economic structure and economic growth (see Table 2.4):
Table 2.4: GRDP scale in the MRD KER for the period 2011 - 2017
(Unit: billion)
Targets
Total GRDP
- Agriculture, forestry and
fishery
Proportion (%)
- Industry, build
Proportion (%)
- Service
Proportion (%)

2011
179,009

2012
195,106

2013
212,734

Year

2014
231,471

60,874

63,705

66,805

69,965

72,168

73,524

74,891

34.01
45,245
25.28
72,890
40.72

32.65
48,875
25.05
82,526
42.30

31.40

53,013
24.92
92,916
43.68

30.23
57,468
24.83
104,038
44.95

28.72
62,082
24.70
117,947
46.58

27.62
65,703
24.68
127,016
47.71

26.33
70,105
24.65
139,438
49.02

2015

251,297

2016
266,243

2017
284,434

Source: Statistical yearbook from 2011 to 2016
- Fifth, economic infrastructure: There are a number of significant projects, but overall the economic
infrastructure is still limited, traffic is almost monotonous and fragmented, so it does not meet the
development demand.
- Sixth, the urbanization process: In the period 2011-2016, the urbanization rate of the KER reached nearly
35%, corresponding to the urbanization rate of the whole country of about 36%, but still unsustainable.


11

2.1.3. Infulence level situation of socio-economic factors to bank credit for agricultural economy
development in the KER
2.1.3.1. The results of the survey on the groups of factors affecting the access to bank credit capital for
agricultural economy development in the KER
Infulence level of the groups of factors examined: the seven groups of factors and the elements in each of the
investigated groups of factors has a significant effect on access to bank credit from medium to very strong.
2.1.3.2. Results of the survey on the infulence level of limited causes and solutions of strengthening bank
credit for agricultural economy development in the KER
The infulence level of limited causes and solutions of strengthening bank credit for agricultural economy
development in the KER have effect result from medium to very strong.
 In general, the results of the survey of individuals and experts are quite similar to the results of the
research questions and research hypotheses.

2.1.4. Achievements acquired and issues raised in agricultural economy development in the MRD KER
2.1.4.1. Achievements acquired
- First on agriculture: The average yield of rice in the period 2011-2017 is 55.3 quintals/ha, higher than the
average of the MRD (about 50 quintals/ha). It is estimated that in 2017, the area of vegetables and fruits in
the KER will reach about 70,000 hectares with an output of nearly 2 million tons of vegetables; The MRD
fruit trees account for more than 50% of the total area and contribute over 60% of the country's output, of
which the KER contributes to the MRD 70%. Cattle-breeding in general mainly dispersed small,
spontaneous, however, the number of cattle and poultry in the region area is quite large.
- Second, forestry: The total forest area of the KER accounts for 59% of the total forest area of the MRD,
forests have economic value and especially environment, contributing significantly to the ecological balance.
- Third, on fisheries and means of catching fishes: By 2017, the KER contributes 24.5 million tons of
fishery, accounting for 57% of the MRD's fishery output. For means of catching fishes, the number of fishing
vessels with a capacity of 90 CV or more in the KER in 2017 is 5,665 units with a total capacity of 2,119
thousand CV.
- Fourth, on the processing industry of agricultural products: In comparison with the previous years, the
processing industry in the KER has made some flourishing, but only 20% of agricultural products have been
processed but not branded.
- Fifth, services for agricultural economy production: By the end of 2015, the level of mechanization in
the MRD is about 1.6 CV/ha to 1.8 CV/ha, approximately one third compared to Thailand. Technical
services, biology, chemistry, information technology, product consumption have been progressing, banking
and financial services are quite developed.
In summary, the agricultural economy of the MRD KER in the period 2011 - 2017 has seen positive changes
and significant achievements. These achievements have made a significant contribution to bank credit, as
well as put the bank ahead of the advantages and disadvantages of strengthening bank credit for agricultural
economy development in the KER of the MRD.
2.1.4.2. Limitations and issues raised in agricultural economy development in the KER
- Limitations in the human resources. - Limited by the structure and size of agricultural economy. Limitations in the link. - Limitations in the new technology. - Limitations in the investment capital. Limitations in living with climate change. The limitations mentioned above are the issues raised that need to
be researched in order to be able to carry out optimal strengthening bank credit for agricultural economy
development in the KER of the MRD in the coming period.

12

2.2. Bank credit situation of agricultural economy development in the KER of the MRD
2.2.1. About the network of branches of commercial banks in the KER
Currently, the MRD KER has more than 40 active credit institutions. In general, the KER with a wide
banking network is significant advantage in the implementation of bank credit strengthening for agricultural
economy development.
2.2.2. Capital mobilization of branches of commercial banks in the MRD KER (2011 - 2017)
2.2.2.1. General results of mobilization activities
Over the past years, commercial banks in the KER have made great efforts in mobilizing capital (Table 2.13)
Table 2.13. Mobilized capital of commercial banks in the KERs (2011 - 2017)
(Unit: billion)
Target
Total mobilized capital
Rate of increase (%)

2011
66,326
24.73

2012
87,560
32.01

Year
2014
110,420
15.42

2013
95,664
9.26

2015
126,694
14.74

2016
148,914
17.54

2017
176,949
18.83

Source: Summary of reports of provincial branches
Table 2.13 shows the bank's capital mobilization has improved significantly, accompanied by increased lending,
but agricultural economy is still in shortage of capital compared to demand for loans. It is possible to compare
the situation of capital mobilization of commercial banks in the KER with whole MRD (See Table 2.14).
Table 2.14. Comparison of scale of capital mobilization of commercial banks in the MRD and the KER
(2011 - 2017)
(Unit: billion)
No.
1
2
3

Target
Capital mobilized in the MRD

Growth rate (%)
Capital mobilized in the KER
Growth rate (%)
Proportion of mobilizing capital of the KER /
mobilized capital of the MRD (%)

2011
186,471
9.32
66,326
24.73

2012
209,373
12.28
87,560
32.01

2013
235,409
12.44
95,664
9.26

Year
2014
273,310
16.10
110,420
15.42

35.57

41.82

40.64

40.40

2015
19,519
16.91
126,694
14.74

2016
375,728
17.59
148,914
17.54

2017
447,635
19.14
176,949
18.83

39.65

39.63

39.53

Source: Collected from Statistical Office and branches of local banks in the KER
The data from Table 2.14 shows that mobilized capital has increased over the years, but the mobilization
situation is still not enough for lending to commercial banks in the MRD and the KER. In fact, in the years
2011-2017, mobilized capital only meets about 80% of the loan balance of the MRD and 70% of the
outstanding loans in the KER (see Table 2.15).
Table 2.15. Comparing the ratio of capital mobilization / outstanding loans of commercial banks in the MRD
and the MRD KER (2011 - 2017)
(Unit: billion)
Year
No.
1
2

Target
Mobilization of Mekong Delta/
Credit in the Mekong Delta
Capital mobilized in the
KER/credit debts in the KER

2011

2012

2013

2014

2015

2016

2017

76.72

76.15

77.04

78.59

83.00

84.39

85.64

55.74

67.75

67.09

70.19

73.87

77.13

81.51

Source: Collected from Statistical Office and branches of local banks in the KER
2.2.2.2. Capital mobilization results by type of mobilization
- Capital mobilized by term: Capital mobilized by term reflects the structure of mobilized capital of commercial
banks (Table 2.16. Mobilized capital by term of commercial banks in the MRD KER (2011 - 2017))
The data from Table 2.16 shows that in the period 2011 - 2017, short-term deposits account for a large
proportion, the next are deposits with term of over 12 months, the rest are demand deposits. In the years


13

2013-2015, the SBV of Vietnam (SBV) has adjusted the ceiling deposit interest rates, where long term
interest rates are higher than short terms, leading to the proportion of deposits with term of less than 12
months decreased, the proportion of deposits with term of over 12 months increased but not significant. The
evolution of term deposit in the economy showed an important aspect, that is the belief in the stability of the
economy, the banking system in the public is not high so they don’t dare to choose medium and long term
deposits due to fear of risk. Commercial banks have to use part of their short-term capital for medium and
long-term loans according to the SBV (using short-term capital for medium and long-term loans from 30% to
60%, down from 60% to 50% in 2017 , down to 45% in 2018 and down to 40% in 2019). The use of up to
45% of short-term capital, sometimes higher for medium and long-term loans, poses a threat to the liquidity
of the bank. Therefore, the commercial banks in the KER should promote the mobilization of medium and
long-term capital to ensure the balance of mobilization term with the loan term in order to strengthen bank
credit for agricultural economy development in the KER of the MRD in the coming years.
- Mobilized capital by type of deposit: Capital mobilized from the population increases gradually (Table
2.17: Mobilized capital by type of deposit of commercial banks in the KER (2011 - 2017)). Table 2.17 shows
that deposits from residential savings from 2011 to 2017 account for the majority of total deposits with the
proportion in 2017 of 79.24% and the rest is savings deposits from economic organizations and other

deposits in the form of gold and foreign currencies have been converted to the same amount. The capital
mobilized from the population increases is favorable for strengthening bank credit for agricultural economy
development in the KER, but in fact agricultural economy in the region is still thirsty capital, that confirms
the need to increase capital mobilization more, more suitable in the coming years.
- Capital mobilized by value: VND deposits increase period 2011-2017 (Table 2.18. Mobilized capitals by
type of value of commercial banks in the MRD KER (2011 - 2017)). Table 2.18 shows that VND deposits
account for a large proportion of total mobilized capital and gradually increase over the years, accounting for
89.48% in 2011 and 97.66% in 2017. The proportion of foreign currency deposits decreased year by year,
from 10.52% in 2011; to 2.34% in 2017. The size of deposits in foreign currency is low and decreasing
because the SBV has repeatedly adjusted the ceiling deposit interest rate, from the end of 2015 till it is 0%.
Increased mobilization of capital, mainly domestic currency, shows that the monetary policy of the SBV has
been corrected. Capital mobilization from the local currency increased accompanied by increased lending is
favorable for strengthening bank credit for agricultural economy development in the KER of the MRD.
2.2.3. The outstanding loans in the form of lending by branches of commercial banks in the KER (2011 - 2017)
2.2.3.1. Outstanding loans by term: Over the years, outstanding loans of branches of commercial banks in
the MRD region (2011-2017) are mainly short-term. (see Table 2.19).
Table 2.19. Credit outstanding balance by term of branches of commercial banks in the KERs (2011 - 2017)
(Unit: billion)
Target
Total outstanding loans of the economy
- Short-term debt
Proportion / total outstanding loans (%)
- Long-term debt
Proportion / total outstanding loans (%)

2011
119,001

2012
129,231

2013
142,584

Year
2014
157,313

2015
171,513

2016
193,066

2017
217,078

88,042

90,362

97,039

105,254

111,277

124,493

130,210

73.98

69.92

68.06

66.91

64.88

64.48

59.98

30,959

38,869

45,545

52,059

60,236

68,574

86,868

26.02

30.08

31.94

33.09

35.12

35.52

40.02

Source: Synthesis Report of the provincial branches of the SBV
Apply formula [1.6] and [1.7] with the data in table 2.19 to calculate the ratio of short-term and mediumterm credit debt to total outstanding loans; short-term loans accounted for 65% to 74% of total outstanding


14

loans. Thus, commercial banks in the region in 2011-2017 have used up to 69% (in 2011), reduced to 39% in
2017 short-term deposits for medium and long-term loans, this ratio within the limits of the SBV.
In theory, bank usually only provides short-term loans, but in terms of small to large-scale production in
Vietnam, while the stock market is not strong enough to be a channel attracts the regulator capital in the
economy, the burden of capital must still be placed on commercial banks. Therefore, it is necessary for
commercial banks to provide medium and long-term loans for the producers to invest in technology, this is
considered as a solution to nurture and strengthen the short-term capital market. When the agricultural
economy is outdated, the bank still lends short-term loans, which the borrowers produce inferior products,
how competitive, have the opportunity to do business effectively to pay debts for bank. This is the vicious
cycle not only of small agricultural production backward engineering but also vicious cycle of bank credit.
Therefore, only the increase of medium and long term funding for investment, especially advanced

technology, will create the sustainable development as desired.
2.2.3.2. Outstanding loans by economic and economic sector
- One. Outstanding loans by kind of economic activity: Consider the outstanding loans by kind of economic
activity to make an overview of what bank credit is focused on (Table 2.20. Credit outstanding in the KER
by economic of commercial banks (2011-2017)). According to the data in Table 2.20, the formula [1.5]
shows that the proportion of credit outstanding for the industry-construction sector in total outstanding loans
of the economy in 2011 was 38.55; similarly the trade - service sector with 44.986 trillion VND, accounting
for 37.80% of the second; agro-forestry-fisheries ranked third with 25,908 billion VND, accounting for
21.77%; the rest is 2,235 billion VND, accounting for 1.88%. By 2017, accounting for the largest proportion
of outstanding loans is still the trade and services sector with 113.848 trillion VND (accounting for 52.45%),
followed by agriculture, forestry and fishery with VND49,544 billion (22.82%). The major contributor to
agro-forestry-fishery credit growth was the credit from Agribank, whose main task was to support the
development of agricultural economy, which directly contributed to the "Tam Nong" and the economy. In
general, the outstanding loans as well as the economic structure restructuring of the region showed that the
investment capital was still open output in width, the problem is the need to develop in-depth.
- Second. Credit outstanding by economic sectors: Considering outstanding loans by type of economic sector
of commercial banks in the MRD KER in the period of 2011-2017 (Table 2.21. Credit outstanding in the
KERs by economic sector of commercial banks (2011-2017)). From Table 2.21, the formula [1.8] calculates
the proportion of outstanding credit of the state economic sector in total credit debt of the economy.
Specifically, the proportion of outstanding state sector debt in the total outstanding loans of the economy is
in the range of 2%-7%; the combined economic component is in the range of 41% -45%; the proportion of
households and individuals is about 47%-55%; the composition of collective economy and foreign
investment is negligible. As a result, credit debt was concentrated in the household-based economy of 47% 55%, and the combined economy was about 41%-45%. This evolution showed that bank credit had focused
on the right direction was to promote private economic development in the socio-economic background.
2.2.4. Scale - structure - quality of agricultural credit outstanding loans in the MRD KER in the form
of loans
2.2.4.1. On the scale of lending and the scale of agricultural economy customers
First. On the scale of agricultural economy loans: Over the past years, commercial banks in the KER have
made great efforts to develop agricultural economy (See Table 2.22)
Table 2.22. Outstanding agricultural loans in branches of commercial banks in the KER (2011 - 2017)

15
(Unit: billion)
Target

2013

Year
2014

2015

2016

2017

119,001
49,873

129,231
54,084

142,584
61,888

157,313
67,279

171,513

82,997

193,066
97,228

217,078
109,538

2,778

4,211

7,804

5,391

15,718

14,231

12,310

5.90

8.44

14.43

8.71

23.36

17.15

12.66

41.91

41.85

43.40

42.77

48.39

50.36

50.46

2011

Total outstanding loans of the economy
Total outstanding loans of agricultural economy
The growth of agricultural economy credit
outstanding
Credit growth rate of agricultural economy credit
(%)
The proportion of outstanding agricultural economy
credit loans / Total outstanding loans (%)

2012

Source: Synthesis Report of the provincial branches of the SBV
Applying the formula [1.2], [1.3], [1.4], based on the comparison of data from Table 2.22, shows that the
increase in agricultural economy outstanding loans and the ratio of outstanding loans are as follows: In 2012,
the credit growth in 2012 will increase by VND 4,310 billion, increasing by VND 4,211 billion compared to
2011 (growth of 8.44%), 2014 increasing by VND 5.391 billion compared to 2013 (growth of 8.71%), 2017
increasing by VND 12.310 billion compared to 2016 (growth of 12.66%). The ratio of credit outstanding
loans in total outstanding loans of the economy in 2011 is 41.91%; 2014 was 42.77%; in 2017 is 50.46%. In
2011, the outstanding loans for agriculture reached VND 49,873 billion, in 2017 reached VND 217,078
billion, increasing 1.8 times compared to 2011. In the context of credit growth of the economy is difficult,
the growth rate of agriculture credit in the past 5 years represents the effort of the banking sector, especially
the commercial banks in the region.
Second. The scale of customers having outstanding agricultural credit loans: Over the past years,
commercial banks have tried to expand the scale of their customers (See Table 2.23)
Table 2.23. Scale of customers of commercial banks in the MRD KER (2011 - 2017)
(Unit: number of customer)
Content
Number of outstanding
customers
The number of customers
increases

2013

Year
2014

2015

2016

2017

2011

2012

753,359

763,824

775,453

802,083

836,327

861,417

889,326

9,348

10,465

11,629

26,630

34,244

25,090

27,909

Source: Synthesis Report of the provincial branches of the SBV
Applying the formula [1.1] and data from Table 2.23 we have: in 2012 there are 763,824 customer (increase
10,465 customers compared with 2011); similarly, 2014 was 802,083 arrivals, an increase of 26,630; by
2015, it’s 836,327, an increase of 34,244; by the end of 2017, 889,326 customers will be added, increasing
27,909 customers in comparison with 2016. The scale of customers having outstanding agricultural credit in
the KER will increase gradually over the years, the highest increase in the years 2014 - 2017, showing that
the efforts of commercial banks to expand and diversify their customers for agriculture and rural areask, and
there are also the efforts of commercial banks in the KER of the MRD for strengthening credit bank.
2.2.4.2. Structure of agricultural economy lending in the KER
First. Structure of loans by agricultural sector: Over the years, the branches of commercial banks in the KER
have made many efforts to develop agricultural economy including agricultural production, construction of
raw material areas and agricultural product processing industry (See Table 2.24)
Applying the formula [1.4] and using the data from Table 2.24 calculate the proportion of agricultural
economy debt in the total outstanding agricultural credit as follows: proportion of agricultural economy debt
in total balance debt of 41.85%; 2014 was 42.77%; in 2017 is 50.46%. Total outstanding agricultural
economy credit in 2011 reached 49.873 billion VND, in 2017 reached 109.538 billion VND, 1.8 times
increase compared to 2011. The agricultural economy credit accounted for 40-45% of the total credit in the


16

agricultural economy sector; followed by industry, processing and consumption of agricultural products, an
average of 33%; the rest is credit outstanding for agricultural infrastructure development, and other

outstanding loans. The above data shows that in recent years branches of commercial banks in the KER have
made great efforts in developing agricultural economy loans including agricultural production, construction
of raw material areas and agricultural processing industry to improve the quality of processed products and
increase the value of agricultural products.
Table 2.24. Outstanding loans by branches of commercial banks in the KERs (2011 - 2017)
(Unit: billion)
Year

Target
Total loan outstanding balance of the
economy
Total agricultural economy loan outstanding
balance
Agricultural economy debt balance / total
outstanding loans (%)
In which
- Agricultural production outstanding
Proportion / total outstanding loans (%)
- Industrial debt, processing and
consumption of agricultural product
outstanding loans
Proportion / total outstanding loans (%)
- Developing agricultural infrastructure
outstanding loans
Proportion / total outstanding loans (%)
- Others
Proportion / total outstanding loans (%)

2011

2012

119,001

129,231

49,873

2013

2014

2015

2016

2017

142,584

157,313

171,513

193,066

217,078

54,084

61,888

67,279

82,997

97,228

109,538

41.91

41.85

43.40

42.77

48.39

50.36

50.46

22,296

23,455

26,257

29,049

33,673

40,641

45,102

44.71

43.37

42.43

43.18

40.57

41.80

41.17

16,908

17,596

20,542

22,168

27,316

30,627

40,364

33.90

32.53

33.19

32.95

32.91

31.50

36.85

227

249

337

341

572

710

1,514

0.46

0.46

0.54

0.51

0.69

0.73

1.38

10,442

12,784

14,752

15,721

21,436

25,250

22,558

20.94

23.64

23.84

23.37

25.83

25.97

20.59

Source: Synthesis Report of the provincial branches of the SBV
Second. Agricultural economy credit structure of by term: Agricultural economy credit outstanding loans by
term in commercial banks in the region from 2011 to 2017 mainly remain short-term (See Table 2.25)
Table 2.25. Outstanding loans classified by term at commercial banks in the KER (2011 - 2017)
(Unit: billion)
Year
Target
2011

2012

2013

2014

2015

2016

2017

Total agricultural economy outstanding loans
In which:
1. Short-term credit loans
Proportion / total outstanding credit of agricultural economy (%)
2. Medium and long term credit

49,873

54,084

61,888

67,279

82,997

97,228

109,538

39,166
78.53
10,707

39,675
73.36
14,409

44,545
71.98
17,343

49,158
73.07
18,121

62,946
75.84
20,051

75,303
77.45
21,925

82,137
74.98
27,401

Proportion / total outstanding credit of agricultural economy (%)

21.47

26.64

28.02

26.93

24.16

22.55

25.02

Source: Synthesis Report of the provincial branches of the SBV
Apply formula [1.6] and [1.7] on the basis of the data in Table 2.25 to calculate the ratio of the short-term
credit balance and medium and long-term credit balance in the total outstanding agricultural economy loans.
Specifically: Ratio of short-term credit balance in total loans in 2011 is 78.53% and long-term ratio is
21.47%; by 2017 this proportion is 74.98%, average weight in the period 2011-2017 is 75%. Thus,
agricultural economy loans in the key economic loans are mainly short-term and the demand for medium and
long-term capital for investment in and application of new technological technologies is very limited. This is
also one of the reasons that agricultural economy in the KER is not available a breakthrough in development
to assume the leading role of the region.


17

Third. Agricultural economy credit structure by type of customers: Outstanding agricultural economy loans
by customers at branches of commercial banks in the KER (2011 - 2017) as follows: (Figure 2.1.
Agricultural economy credit loans by type of customers in branches of the MRD KER (2011 - 2017)).
Applying the formula [1.9] and comparing the figures in Figure 2.1, calculate the credit outstanding
proportion of each customer in total agricultural rconomy credit loans. Accordingly, the credit balance of
enterprises accounted for 43%, followed by individuals with the proportion of 39%, households accounted

for 17%, the rest is the cooperative.
2.2.5. Credit quality situation for developing agricultural economy
2.2.5.1. Agricultural economy bad credit
- General agricultural economy credit bad debt: Branches of commercial banks in the MRD KER have
made efforts to limit bank credit risk (see Table 2.26)
Table 2.26. Bad debts of branches of commercial banks in the MRD KER (2011 - 2017)
(Unit: billion)

Target
Total loan outstanding balance of the economy
Bad debt of the economy
Proportion bad debt of the economy / total loan
outstanding balance of the economy (%)
Agricultural economy bad debt
Proportion agricultural economy bad debt / total
loan outstanding balance of the economy (%)

Year
2014

2011

2012

2013

2015

2016

119,001
3,527

129,231
4,558

142,584
3,702

157,313
6,458

171,513
7,124

193,066
6,479

2017
217,078
6,298

2.96

3.53

2.60

4.11

4.15

3.36

2.90

884

1,331

1,315

1,553

1,462

1,444

1,643

0.74

1.03

0.92

0.99

0.85

0.75

0.76

Source: Synthesis Report of the provincial branches of the SBV
Using the formula [1.10] and based on the data in table 2.26, we calculate the bad debt ratio of the economy
and the agricultural economy bad debt ratio in total outstanding loans of the economy from 2012 to 2017
respectively: 2012, 2013, 2014, 2015, 2016 is 3.53%; 2.60%; 4.11%; 4.15%; and 3.36%. Total bad debts of
commercial banks in the region increased sharply and exceeded the permitted level of the SBV (less than
3%) in 2012, 2014, 2015 and 2016 due to the credit of seafood processing enterprises in Ca Mau province.
Bad debt ratio of commercial banks in Ca Mau is very high, the average period of 2011-2017 is 6.46%, due
to risks from fisheries companies in recent years such as Binh An, Song Hau , Phuong Nam, ... and other
businesses investing in real estate. However, if considering and assessing the bad debt rate of agricultural
economy in total outstanding loans of the economy, another reality is low debt, the average period of 20112017 is around 0.86% , accounting for about 25% of the total bad debt of the economy. Bad debt of
agricultural economy accounts for a small proportion compared to other sectors, in 2011, the highest bad
debt of agricultural economy in the last 5 years were only 1.03%, it was noted that efforts to control the
agricultural economy credit quality of branches of branches of commercial banks in the region.
- Agricultural economy bad debt by internal agricultural economy and by customer: In order to further
assess the quality of agricultural economy credit, we consider agricultural economy sector bad debts
classified by internal agricultural economy and customers of branches of commercial banks in the KER from
2011 to 2017 (see Table 2.27). From Table 2.27 shows that the agricultural economy sector bad debt is
mainly concentrated in agricultural production with an average of 39% of total agricultural economy bad
debt in 2011-2017, next is bad debt in industry, processing and consumption of agricultural product sector
with the average proportion of 33% and the rest is other sectors in agricultural economy. According to
customers, the bad debt of agricultural economy is concentrated mainly in corporate customers with an
average proportion of bad debts in 2011-2017 period is 47%, individual customers with the proportion of
34%, bad debt of the household accounts for 19%. It is possible to recognize that part of the reason for bad


18

debt in agricultural production is that it is directly affected by weather, climate and the risks of natural
disasters, and the impact of the market, an important part is due to backward technology and limited
management, low labor productivity. Therefore, it is necessary to have a practical plan to limit the bank
credit risk to develop agriculture economy in the KER.
Table 2.27. Agricultural economy bad debts classified according to internal agricultural economys and
classified by customers at branches of commercial banks in the KER (2011 - 2017)
(Unit: billion)
Target

2011
2012
884 1,331
1. Agricultural economy bad debt
In which
2. Agricultural economy bad debt by internal agricultural economy
2.1. Agricultural production
354
519
Proportion (%)
40.05 38.99
2.2. Industry, processing services, consumption of
272
429
agricultural products
Proportion (%)
30.77 32.23
2.3. Development of agricultural infrastructure
13
14

Proportion (%)
1.47
1.05
2.4. Others
245
369
Proportion (%)
27.71 27.72
3. Agricultural economy bad debt by customers
3.1. Individual
294
401
Proportion (%)
33.26 30.13
3.2. Household
186
324
Proportion (%)
21.04 24.34
3.3. Owner of the farms
0
0
Proportion (%)
3.4. Co-operative
0
0
Proportion (%)
3.5. Enterprises
404
606

Proportion (%)
45.70 45.53

2013
1,315

Year
2014
1,553

2015
1,462

2016
1,444

2017
1,643

527
40.08

635
40.89

518
35.43

555
38.43

521
31.71

355

482

537

547

791

27.00
21
1.60
412
31.33

31.04
23
1.48
413
26.59

36.73
33
2.26
374

25.58

37.85
28
1.97
314
21.75

48.14
9
0.55
322
19.60

353
26.84
400
30.42
0
0
562
42.74

428
27.56
427
27.50
0
0
698

44.95

611
41.79
84
5.75
0
0
767
52.46

615
42.57
97
6.75
0
0
732
50.68

661
40.23
87
5.30
0
0
895
54.47

Source: Synthesis Report of the provincial branches of the SBV

2.2.5.2. Agricultural economy debt collection coefficient indicator
Agricultural economy debt collection coefficient indicator of branches of commercial banks in the region
from 2011 to 2017 (Table 2.28. Agricultural economy debt collection coefficient indicator of branches of
commercial banks in the MRD KER (2011 - 2017)).
Applying the formula [1.11] and data from Table 2.28, we have the agricultural economy debt collection
coefficient indicator in 2011 of the branches of commercial banks in the KER is 95.80%; 93.57% in 2014; in
2017 is 89.42%; the average debt collection ratio for 2011-2017 is 90%, which means that total debt
collection is less than total lending, which suggests that the bank is focused on developing agricultural credit
loans, as a result, lending has increased over the years. The problem is that banks should pay attention to
after-lending, urge to ensure timely repayment, limiting delayed repayment, overdue debt to improve the
quality of agricultural economy credit.
The issue of setting up banks should focus on after-lending control, urging to ensure timely collection of
debts, limiting delinquency, overdue debt, and improving the quality of agricultural credit.
2.2.5.3. Agricultural economy turnover indicator
In recent years (from 2011 to 2017), branches of commercial banks in the MRD KER have made great
efforts in speeding up the credit flow (Table 2.29. Agricultural economy turnover indicator of branches of
commercial banks in the KER (2011 - 2017)).
Using the formula [1.12] and the data from Table 2.29 we have the agricultural economy turnover indicator
in 2012 of 1.41 laps; 2014 is 1.21 laps; 2011 is 1.01 laps, the average turnover indicator for the period 2011-


19

2017 is 1.21 laps (about 296 days). Interestingly, agricultural economy turnover indicator in the region is
erratic and slowing down and in 2017 it is only 1.01 laps per year. The average loan term of agricultural
economy credit for 9-10 months is relatively suitable for the agricultural production cycle.
2.3. Achievement, limitations and causes of limitations of commercial bank credit for agricultural
economy development in the KER (2011 - 2017)
2.3.1. Major achievements of commercial bank credit for agricultural economy development in KER
2.3.1.1. Contribute to increase productivity, value, output of agricultural products for the domestic market

and export
Bank credit of branches of commercial banks has had a positive impact on the agricultural economy of the
KER in the recent period (2011 - 2017) (See Table 2.30).
Table 2.30. The relationship between agricultural economy credit outstanding and agricultural production
value of the MRD KER (2011 - 2017)
(Unit: billion)
Content

Total agricultural economy loan
outstanding balance
Growth rate of agricultural economy loan
outstanding balance (%)
Agricultural production value
Growth rate of agricultural production value (%)

2011

2012

2013

49,873

54,084

61,888

5.90

8.44

120,563
1.83

123,155
2.15

Year
2014

2015

2016

2017

67,279

82,997

97,228

109,538

14.43

8.71

23.36

17.15

12.66

126,665
2.85

129,743
2.43

134,180
3.42

138,125
2.94

142,117
2.89

Source: General data from the General Statistics Office at provinces and city, and Report of the provincial
branches of the SBV
From Table 2.30, the agricultural economy loan outstanding balance of branches of commercial banks in the
region and the value of agricultural production in the period 2011-2017 generally increased; the average
growth rate of agricultural economy loan outstanding balance in 2011-2017 is 1%, which makes the
agricultural production value of the same period increase by 0.2%; the average agricultural economy credit
growth of 13% per year has contributed to increase the value of agricultural production 2.6%. This fact
shows that the agricultural economy of the region as well as of the MRD is still largely broad-based and has
come to its limits. As a result, the bank credit strengthening should be paid attention to invest for the
development of the agricultural economy in depth.
2.3.1.2. Other achievements: From 2011 to 2017, bank credit not only contributed to the development of the

agricultural economy in the region, but also contributed to the following areas: contributing to the provision
of more inputs to the non-agricultural sector; contributing to boosting the consumption of non-agricultural
products; contributing to the restructuring of the economy, labor structure and product structure; contributing
to increase the income of laborers; contributing to poverty reduction (the rate of poor households in the
region in 2011 is 8.06%, at the end of 2017 about 6.2%).
2.3.2. Limitations and the problems facing agricultural economy credit in the KER
2.3.2.1. Limitations from banks: - First, the loan source is limited. Second, limited human resources. Third, restrictions on lending and restrictions on the use of interest rates. - Fourth, restrictions on the
implementation of restrictions on lending risks. - Fifth, restrictions on customer strategy plan. - Sixth,
restricted by procedures, records, credit procedures and restrictions on the activities of inspection and control
of banking operations. - Seventh, restrictions on dealing with bad debts, handling collateral assets.
2.3.2.2. Limitations from customers: - First,limited human resources,financial capacity,production model. Second, limitations on the application of science, technology. - Third, limitations on linking production with
processing industry and markets.


20

2.3.2.3. Limitations from macro management
[i] For the leaders of the MRD KER
- First, fully and comprehensively aware of the impacts of climate change on the MRD in general and in the
KER in particular is not timley. - Second, the link between the provinces in the region together with the
provinces in the MRD is also formal, lacking close links necessary. - Third, there has not been a common
plan to concentrate resources on the implementation of the key works of the KER.
[ii] For macro management in general
- First. Limited by the strategy of agricultural economy human resources development. - Second. Limited in
economic restructuring and associated with the MRD. - Third. Restrictions on investment in economic
infrastructure are spread out. - Fourth. Limitations in research and application of new technologies to
develop hi-tech agricultural economy. - Fifth. Restrictions on mobilizing total resources for agricultural
economy development. - Sixth. There is no really main force bank lending for the development of
agricultural economy. - Seventh. No agricultural industrial zones have been established. - Eighth. The KER
and the MRD lack a direct co-ordinating organization. - Ninth. Restrictions due to policy, macro

management mechanism for agricultural economy has not really come into life.
[iii] Some key limitations from the SBV: Systematic in banking operations is still limited, not connected to
each other; weak due to lack of system synchronization and exploitation of information technology; lack of
uniformity, confidentiality and safety are low, backward technology.
2.3.3. Limitation causes of strengthening bank credit for agricultural economy development in the MRD KER
2.3.3.1. Limitation causes from the commercial banks themselves
- First, due to the lack of plans to implement the strategy of improving capital mobilization and linking
capital mobilization: due to the bank's capital mobilization plan is not closely linked to reality, not linked to
each other, ... Mobilization is not linked to loans to nourish capital.
- Second, the reason for this is due to the lack of a strategic implementation plan for human resource
development: In fact, branches of commercial banks in the KER lack a realistic plan to implement the
strategy of building and developing human resources with high professionalism.
- Third, limitation causes on lending and using the interest rate tools: Lending spreads out, almost
"dividends" for small agricultural producers, is less focused on lending to create breakthrough development.
- Fourth, limitation causes on limiting loan risk: The implementation of credit procedures, inspection and
control is not very thorough, timely to slow the detection of risk signs.
- Fifth, limitation causes on implementing customer strategy: In general, the banks lack the plan to optimize
the customer strategy.
- Sixth, limitation causes on the procedures, documents, credit procedures and restrictions in banking
inspection and control: Loan procedures in the KER of the MRD, although many improvements have been
made, however it still seriously "protect" lender so there is some lack of necessary suitability. Procedures,
records are still cumbersome, heavily legal elements.
- Seventh, limitation causes on dealing with overdue debts, handling collateral assets: Collateral assets of
farmers is usually land, valuation is two to three times lower than the market price, so when risk happens, the
return of capital is difficult.
2.3.3.2. Limitation causes from customers
- First. This is due to the quality of human resources, financial capacity and inadequacy of the production
model. - Second. Weakness cause in the application of science, technology. - Third. Cause on lack of
linking agricultural production with processing industry and market.

21

2.3.3.3. Limitation causes from macro management
[i] For the leaders of the MRD KERs
- First. Awareness about climate change: It can be said that leaders of the provinces, city in the KER in the
early years have been somewhat passive in the recognition and acceptance of the impact of climate change
occurs quite quickly and irregularities in the MRD in general and in the KER in particular. Therefore, it is
not timely to plan for such changes. - Second. Lack of real bonding in domain links, subregions. - Third.
Lack of general plan implementation principle: the provinces have not thoroughly centralized resources to
implement uniformity to ensure consistency and efficiency.
[ii] For macro management in general
- First, the lack of a strategy as well as practical and effective plans of human resource development for
agricultural economy. Second, the agricultural economy restructuring of the KER remains problem. - Third,
limitation cause due to investment in economic infrastructure spread, lack of breakthrough necessary. Fourth, the research and application of new technologies for agricultural hi-tech agriculture has not been
paid much attention. - Fifth, due to lack of methods to mobilize total financial resources to develop
agricultural economy in the KER. - Sixth, due to the lack of a really main force bank for agricultural
development loans, Agribank in Vietnam is considered as a bank providing loans for agriculture and rural
development, however, due to lack of suitable mechanism, Aribank also operates as a general trading
company so it can not focus on playing a real role as a specialized bank for agricultural and rural loans. Seventh, have not set up agricultural industrial zones: In the MRD almost every province has an industrial
park, but in the field of agriculture, there is no real zone means the agricultural area has the stature like the
whole industrial zone. - Eighth, the lack of a direct co-ordination which has effect for both of the KER and
the MRD. - Ninth, the limitation cause is due to the policy of agricultural economy development is lack of
synchronism and not really come into life.
[iii] For the SBV
The SBV has two outstanding obstacles are: the lack of consistency in the operation of banking, and the lack
of consistency in the sustainability operation linkages and the lack of synchronization and exploitation of
information technology in banking operations, which are the causes that should soon be overcome.
Conclusion Chapter 2
In this chapter, the thesis presents the general status of the KER in terms of economic characteristics,

economic structure, population structure, human resources, per capita income, urbanization, the situation of
surveying socio-economic factors affecting bank credit, achievements, limitations and limitation causes for
agricultural economy development in the KER in recent years. The thesis analyzes the contents of capital
mobilization and use of capital for agricultural economy development in terms of term, economic
composition, the impact of credit on internal agricultural economy and pointing out the issues that need
attention for the credit of agricultural economy development in the KER in the last time. Based on that, the
thesis shows the achievements, limitations and causes of limitations of bank credit for agricultural economy
development in the KER include: [i] Group of limitations and causes of limitations from commercial banks
themselves: limitations and causes of limitations on capital, human resources development, conceptions,
lending modalities and the usage of interest rate tools, limiting lending risk, customer strategy
implementation plan, process, loan application procedures and inspection and control activities, dealing with
bad debts and collateral assets of comercial banks in the KER. [ii] Group of limitations and causes of
limitations from customers: The weakness of human resources, financial capacity and production and
business organizational for high-tech agricultural economy development in the KER. [iii] Group of