Insights
Tha nh Tu
Supply chain finance boasts great potential for growth to access new markets as well as participate more deeply in the global value chain. Supply chain finance, therefore, has huge growth potential, and BIDV - the leading financial institution in Vietnam - should not ignore this market.
Mr. Can Van Luc, chief economist, BIDV
Supply chain finance remains new and limited in Vietnam. A seminar on promoting the sale of supply chain financing (SCF) products held by BIDV on 5 November 2021 received interesting sharing on SCF problems and solutions.
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ccording to Mr. Can Van Luc - chief economist and head of BIDV Training and Research Institute, Vietnam is an economy heavily dependent on trade, with a total import-export turnover of USD543 billion in 2020 (equivalent to 156 percent of the country’s GDP in 2020). Thanks to new-generation free trade agreements, Vietnamese businesses have the opportunity
Supply chain finance can be understood as financial products that are provided to buyers or sellers in a supply chain, in order to optimize cash flow, minimize financial costs, mitigate risks and improve business efficiency. Some prominent products include receivables discounting (receivables discounting, factoring, payables financing, etc.) and commoditybacked financing (receivables-backed loan, distributor financing, inventory financing, pre-shipment financing). Given the development of global trade, supply chain financing achieved a good growth rate (about 5 percent annually in the period 2009-2017). However, the potential of this activity in the world is still quite large. Currently, small and medium-sized enterprises participating in the supply chain in most regions are experiencing financial shortages (about USD4.7 trillion). Trade finance is also short of USD1.1 trillion or 10 percent of the turnover. SCF remains new and limited in Vietnam. KPMG estimated the potential of the SCF market in Vietnam at USD50 billion by 2021, but only a small part of this has been exploited. In 2020, more than 800,000 micro, small and mediumsized enterprises were registered to
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B I D V review
operate in Vietnam, equivalent to 98.1 percent of the total number of operating enterprises, accounting for 50 percent of Vietnam's GDP. In Vietnam, despite the Covid-19 pandemic, the economy has shown
