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 $20 million a year to support trade in Vietnam. 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,” said Steven Beck, head of trade finance at ADB. “This agreement will help create economic growth and jobs.”
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 $6.9 billion in trade in Vietnam. Of these, roughly 75% were for trade financing for small and medium-sized enterprises.
“Vietnam is one of the Trade Finance Programme’s most active and important markets and signing this agreement adds to the programme’s significant record of support for trade in the country,” said Santosh Pokharel, TFP’s relationship manager for Vietnam.
Vietnam’s economic growth has been increasing since 2012— gross domestic product (GDP) expanded 6.7% in 2015, its strongest increase 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 the cities and serious development challenges remain, particularly, to make growth more inclusive. For instance, SME access to trade finance remains limited with Vietnam’s banking sector not yet as developed as in other markets in the region like Malaysia, the Philippines, or Thailand. As such, international banks either have limited or no appetite to take risks on Vietnamese banks.
As well as providing loans and guarantees in Vietnam, 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.
Backed by ADB's AAA credit rating, the TFP provides guarantees and loans to over 200 partner banks to support trade, enabling more companies throughout Asia to engage in import and export activities. With dedicated trade finance specialists and a response time of 24 hours, the programme has established itself as a key partner in the international trade community, providing fast, reliable, and responsive support to fill gaps in the region’s most challenging markets.
Since 2009, the TFP has supported more than 8,000 small and medium-sized enterprises across the region, with about 11,500 transactions valued at over $23.2 billion, in sectors ranging from commodities and capital goods, to medical supplies and consumer goods.
