Graduate Business School Dissertation Cover Sheet 2011-2012 Student name: LONG BUI THANH Student number: 2826149 Course: MSCAF Subject: Master of Accounting and Finance Management Study Mode: Full time Lecturer Name: Suzanne Burdis Dissertation Title: The microfinance for the poor in Vietnam: The case of Tra Vinh province Date submitted: 13/9/2013 Stage/year: x Part-time Plagiarism disclaimer: I understand that plagiarism is a serious offence and have read and understood the college policy on plagiarism I also understand that I may receive a mark of zero if I have not identified and properly attributed sources which have been used, referred to, or have in any way influenced the preparation of this assignment, or if I have knowingly allowed others to plagiarise my work in this way I hereby certify that this assignment is my own work, based on my personal study and/or research, and that I have acknowledged all material and sources used in its preparation I also certify that the assignment has not previously been submitted for assessment and that I have not copied in part or whole or otherwise plagiarised the work of anyone else, including other students Signed & dated: Please note: Students MUST retain a hard / soft copy of ALL assignments as well as a receipt issued and signed by a member of Faculty as proof of submission The microfinance for the poor in Vietnam: The case of Tra Vinh province Research dissertation presented in partial fulfillment of the requirements for the degree of MSc in Accounting and Finance Management (HETAC & NTU) Graduate Business School Griffith College Dublin Dissertation Supervisor: Dr SUZANNE BURDIS Candidate Name: LONG BUI THANH 2013 Candidate Declaration Candidate Name: LONG BUI THANH I certify that the dissertation entitled: The microfinance for the poor in Vietnam: The case of Tra Vinh province Submitted for the degree of: MSc in Accounting and Finance Management is the result of my own work and that where reference is made to the work of others, due acknowledgment is given Candidate signature: Date: Supervisor Name: Supervisor signature: Date: Acknowledgements I dedicate this work to my supervisors, Suzanne Burdis, who gave me much good knowledge on my dissertation I would like to thank my mom, dad, brothers and sister who have always been there when I needed them and believed in me even when I did not I really thank so much my wife and my daughter whom give beliefs and hopes in my life Abstract The microfinance for the poor in Vietnam: The case of Tra Vinh province This study examines real situations of microfinance programs for the poor in Tra Vinh province, Vietnam Besides, the study also analysed the impacts of microfinance operations in poverty reduction from 2010 to 2012 at Tra Vinh province Namely, the study measured the effectiveness’s microfinance for the poor and weakness’s poverty reduction policies in Tra Vinh province The study conducted to survey the poor’s measurements in access to microfinance sources Therefore, the research presented recommendations about appropriate polices that can contribute practical solutions in poverty reduction through microfinance programs at Tra Vinh province, Vietnam Table of contents Candidate Declaration Acknowledgements Abstract Table of contents INTRODUCTION …… …………………………………………………………….1 1.1 Overview …………………………………………………………………………….1 1.1.1 Overviews of Vietnam ………………………………………………………… 1.1.2 Overviews of Tra Vinh province ………………………………………………1 1.2 Research objectives and Aims ……………………………………………………….4 1.3 Structure of dissertation …………………………………………………………… LITERATURE REVIEW ………….……………………………………………… 2.1 Introduction ………………………………………………………………………….8 2.2 The nature of microfinance ………………………………………………………….8 2.3 Microfinance policies at some developing countries in the world…………………11 2.3.1 Bangladesh ………………………………………………………………………… 11 2.3.2 India (SEWA Bank)…………………………………………………………………15 2.3.3 Indonesia (Bank Rakyat Indonesia)…………………………………………… 16 2.4 Microfinance policies at Vietnam ………………………………………………….16 2.5 Microfinance in the context of Tra Vinh province, Vietnam ………………………21 RESEARCH METHODOLOGY ………………………………………………….23 3.1 Introduction ……………………………………………………………………… 23 3.2 Research Objective …………………………………………………………………23 3.3 Research strategy ………………………………………………………………… 24 3.4 Methods for data collection ……………………………………………………… 25 3.4.1 Primary data ……………………………………………………………………… 26 3.4.2 Advantages and disadvantages of primary data ……………………………….27 3.4.3 Secondary data …………………………………………………………………….28 3.4.4 Advantages and disadvantages of secondary data ……………………………28 3.5 Possible techniques for analyzing data ……………………………………………29 3.6 Access and research ethics issue ………………………………………………….29 RESEARCH ANALYSIS …………………………………………………………31 4.1 Introduction ……………………………………………………………………….31 4.2 Analyzing real situations of the poor people at Tra Vinh province……………….31 4.2.1 Information of the poor at Tra Vinh province …………………………………31 4.2.2 A summary of the poor in Tra Vinh province ………………………………….34 4.3 The realty of getting access to microfinance programs in the Tra Vinh province.37 4.3.1 Information on microfinance providers in Tra Vinh province …………… 37 4.3.2 Evaluating microfinance operations in Tra Vinh province ……………… 42 4.4 Measuring the effects of microfinance programs ……………………………… 44 4.5 Comments about microfinance programs for the poor at Tra Vinh province……46 4.5.1 The effectiveness of microfinance programs at Tra Vinh province……… 46 4.5.2 Limitations of microfinance programs at Tra Vinh province …………… 47 RECOMMENDATIONS AND CONCLUSIONS …………………………… 48 5.1 Evaluating the impacts of microfinance programs for the poor in Tra Vinh province ……………………………………………………………48 5.1.1 The success of microfinance programs for the poor in Tra Vinh province in past three years …………………………………………………….48 5.1.2 Weakness of microfinance programs for the poor in Tra Vinh province in past three years ………………………………………………… 49 5.2 5.3 Recommendations for microfinance programs in the futures …………………50 5.2.1 The long term microfinance strategy for the poor in Vietnam ……………50 5.2.2 Direct microfinancing solutions for the poor in Tra Vinh province…… 51 Conclusion …………………………………………………………………….52 5.3.1 Results of my research …….………………………………………………… 52 5.3.2 Limitations of my dissertation ……………………………………………… 52 5.3.3 Experiences of research ………………………………………………………52 Reference ………………………………………………………………………… 54 Appendix A: Survey questionnaire - The microfinance for the poor: The case of Tra Vinh province, Vietnam…………………………………………………… 57 Appendix B: Table 4.7 - Statement of the poor household data in Tra Vinh province 2010 – 2012 ………………………………………………………………60 The microfinance for the poor in Vietnam: The case of Tra Vinh province 2013 Chapter INTRODUCTION 1.1 Overview 1.1.1 Overviews of Vietnam Vietnam is a nation was damaged significantly by a terrible war in long time and it was ended in 30/4/1975 There are many challenges for Vietnam economy that was over Vietnamese people Most of the Vietnamese people lived in poverty stricken life, and the big numbers of Vietnamese people were illiterate after the end of the Vietnamese war The Vietnam economy depended on completely aids from communist countries in the war such as Soviet Union And then, Vietnam was a socialist country and had a subsidy economy After the end of the war, Vietnam economy also depended on many aids from socialist countries Governmental economy showed many weaknesses in control and management based on socialist models Especially, there is a failure of Soviet Union and communist countries in the world that effected significantly for Vietnam economy Besides, there was an economic embargo with Vietnam from America after they failed Vietnamese war Therefore, Vietnam had not opportunities access to developed countries in the world Vietnamese leaders were very bad economic management knowledge and they always leant social economy model which are causes of Vietnam economy were very weak from 1975 to 1986 In addition, corruption was a big problem in Vietnamese government that was created a drawback perspective for Vietnam economy In recent years, Vietnam economy has been changed significantly in many sides Vietnam is one of the countries with higher economic growth in Asia pacific (behind China and India) After 1986, Vietnamese leaders looked many weaknesses in economic management and the failure of socialist model The Vietnam changed completely economy that considered a period of reform in Vietnam economy Besides, American government decided to lift the embargo toward Vietnam Vietnam could open accessing to all countries in the world These are reasons for significant Vietnam economy growth Long Bui Thanh Page The microfinance for the poor in Vietnam: The case of Tra Vinh province 2013 Besides the success of economy, Vietnam also showed the interests in poverty reduction There were 60% Vietnamese population in 1990 lived a miserable condition after the war and the rate of poor population reduced 10% Vietnamese population in 2012 according to poverty standards of United National Organization (World Bank, 2012) There were about 8.85 million Vietnamese poor people, about 2.8 million poor households (Asia Development Bank, 2012) From these points show that was an effective change in the poverty reduction at Vietnam The percentages of poor people reduced significantly in the past years However, the numbers of poor people occupied a big amount of population The poor always were disadvantages of economic changes There are still more challenges facing the poor people day by day As the economy grows so it also creates high inflation, the increase of cost of goods adds to the disadvantages faced by the poor in the life Most of the poor lived in remote and rural areas and their jobs were complete farming They always were low education and limited opportunities accessing to modern information Therefore, they had to face poor life in long time Long Bui Thanh Page The microfinance for the poor in Vietnam: The case of Tra Vinh province 2013 Chart 1: Vietnam Map (Source: www.en.vietnamitasenmarid.com) Long Bui Thanh Page The microfinance for the poor in Vietnam: The case of Tra Vinh province 2013 1.1.2 Overviews of Tra Vinh province Tra Vinh province is one of the poorest provinces in Vietnam Tra Vinh province was established in 1992 Public infrastructures were very poor, the most of nature was agriculture and aquaculture Local government invested too slowly in poverty reduction There was about 21 % of population is the poor in 2012 in Tra Vinh province and there was 52 % of poor people are Khmer, Khmer is ethnic minority (Department of Labor and Social Welfare Service of Tra Vinh province, 2013) The number of the poor always is a big interesting of local government and local people in many past years Most of the poor lived in lack of many sides such as low education, lack of material facilities, lack of modern information, etc Especially, Khmer objectives were many disadvantages of poor life conditions They had customs living in remote regions far urban areas such as shanties, home villages, and they limited to communicate modern society which created limitations of modern information, education, and modern society Chart 2: Tra Vinh province Map (Source: www.en.vietnamitasenmarid.com) Long Bui Thanh Page The microfinance for the poor in Vietnam: The case of Tra Vinh province 2013 1.2 Research objectives and Aims Based on real situation of poverty in Tra Vinh province in past years, Government interested more than in poverty reduction through microfinance programs were from Banks, credit unions, social unions It showed many objectives for poverty reduction Microfinance is a good solution for poverty reduction in many countries in the world and this is apparent in India, Indonesia, Cambodia, etc The model of Grameen Bank in Bangladesh is a symbol for microfinance programs in the world Thence, it gave me an idea for research strategy about microfinance in my home town I was really admired model of Grameen Bank in Bangladesh by Vietnam and Banladesh had the same situations about economy and religions The model of Grameen Bank showed significant success through Dr.Yunus, who found Grameen Bank, was the Noble Peace Prize winner in 2006 I was born and grew up in Tra Vinh province, Vietnam I understand the challenges of the poor in my fatherland Also, I have learned finance in Griffith College Dublin and they are the reasons for choosing the research topic “The microfinance for the poor in Vietnam: the case of Tra Vinh province” It aims to identify appropriate microfinance solutions to operate in Tra Vinh province to improve the situation of the poor people in that province Financial factor was a big interesting for the poor, because the finance could solve many things for people Especially, a few money could help the people over normal challenges that is a big opportunities for the poor The poor could only manage small money and use effective In recent time, there were many microfinance organizations established in Tra Vinh province It provided many small loans for the poor And then, the numbers of the poor were access to many borrowings However, there were not effective analysis of these microfinance programs and it lack information for microfinance operations in poverty reduction Based on financial knowledge, I was leant from Griffith College Dublin; I have been considered if microfinance uses right objective and right way which will create much effectiveness for poverty reduction in Tra Vinh province It can make diversified income for the poor through practical microfinance Long Bui Thanh Page The microfinance for the poor in Vietnam: The case of Tra Vinh province 2013 policies To measure the real impacts of microfinance programs in Tra Vinh province for the poor, I conduct to study microfinance operation from 2010 to 2012 Firstly, the study will analyze real situations of the poor through household criterion such as income, living costs, the number of household, age levels … Secondly, the study will analyze real operations of microfinance organizations in Tra Vinh province and measure levels of the poor were access to borrowing from microfinance programs In addition, it will survey measurements of the poor upon procedure of borrowings, interest rates, loan levels, etc Finally, results of research will give a deep view about microfinance operations in Tra Vinh province And then, I will show recommendations to contribute effective poverty reduction through appropriate polices 1.3 Structure of dissertation In my research, I used survey method and comparison analysis to measure the real situation of the poor in Tra Vinh province concerning their access to microfinance organizations I aim to identify the impacts of the current microfinance programmes available to the poor in Tra Vinh province Therefore, I can give comments and recommendations There are five chapters in my research including: Chapter is an introduction that presents overviews about Vietnam economy, the situations of the poor in Tra Vinh and Vietnam Therefore, it shows objectives and trends for the research Chapter is Literature review that conducts to collect theory about microfinance operations in the world and Vietnam It built a model of theory for microfinance perspective in the research Especially, I focus on the model of Germeen Bank in Bangladesh that is a symbol of the successful microfinance model in the world Chapter is research methodology that presents objectives and methods of research And then, it also shows analysis methods and gathering data collections Chapter is finding analysis that presents results of data collection and analysis Chapter is recommendations and conclusions that include comments about microfinance operations and recommendation solutions for appropriate polices to ensure the effectiveness of microfinance programs for the poor in Tra Vinh province Long Bui Thanh Page The microfinance for the poor in Vietnam: The case of Tra Vinh province 2013 At the end of my research, I give my comment for myself in process of research that is very important for my job in the future Besides, the dissertation can give a general view about business research methods It also is a good experience for my life Long Bui Thanh Page ... life Abstract The microfinance for the poor in Vietnam: The case of Tra Vinh province This study examines real situations of microfinance programs for the poor in Tra Vinh province, Vietnam Besides,... poor in Vietnam: The case of Tra Vinh province 2013 1.1.2 Overviews of Tra Vinh province Tra Vinh province is one of the poorest provinces in Vietnam Tra Vinh province was established in 1992... summary of the poor in Tra Vinh province ………………………………….34 4.3 The realty of getting access to microfinance programs in the Tra Vinh province. 37 4.3.1 Information on microfinance providers in Tra Vinh