Re: Bloomberg -- Vietnam Financial Center Takes Shape, Seeking Wall Street Links
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Kien Pham
<kienpham@neverchange.com>Mar 29, 2026, 3:58:49 AMMar 29
to GSB Vietnam 3, KP Support Team
Friends:
See below on the Vietnam international financial center IFC. I am considering forming a private debt fund PDF to provide working capital loans to Vietnamese SMEs, a sector that is ripe for debt support and the returns to the PDF can be lucrative and reliable through frontend proprietary credit scoring that has been market-tested for the last 3 years and generated more than $1.3 billion of shortterm working-capital loans.
I aim to raise $100 million for PDF 1 and would like to have your thoughts and advice, and possibly leads to potential investors into the PDF.
Please let me know if you are interested in learning more. I include the English translation of a white paper that is related to this topic that was published recently.
Hope to hear from you, kp
BEGIN:
This article is published on Phuong Dong Magazine in November 2025; this magazine is a monthly policy-oriented publication with strong ties to the current leaders of Vietnam.
Title - Policy: An Open Mechanism for Small and Medium-Sized Enterprises
Pham Duc Trung Kien*
*Master’s degree in Business Administration, Economics, and Public Policy from Stanford University; currently Senior Advisor to U.S. investment fund TPG Capital and Chairman of the charitable social organization The Vietnam Foundation.
Vietnam is standing at a historic crossroads. If it continues to maintain the current fragmented and inefficient provincial-level credit guarantee mechanisms, it will miss the opportunity to transform small and medium-sized enterprises (SMEs) into a true engine of economic growth. By contrast, if Vietnam dares to break through and establish a modern, national-level credit guarantee mechanism based on risk-sharing principles and the power of digital technology, it can create a historic and strategic turning point, one that demonstrates the vision and commitment of leaders to removing long-standing bottlenecks that have constrained the private sector for many years. The long-term vision of a national credit guarantee mechanism is to create leverage for the development of a new generation of enterprises - more transparent financially, more competitive, and more proactive in innovation. When empowered, SMEs will become the pioneering force in the country’s industrialization and modernization process, contributing to the building of a resilient and self-reliant economy. The time has come for decisive action to turn the potential of SMEs into reality and to realize Vietnam’s aspiration of becoming a high-income country by 2045.
The Paradox Facing Small and Medium-Sized Enterprises
At the National Conference on the implementation of Politburo Resolution No. 68-NQ/TW, Prime Minister Pham Minh Chinh affirmed that SMEs are a key driving force of economic development. The statistics clearly reflect this role. Vietnam currently has more than 940,000 enterprises, of which 98% are SMEs, contributing over 40% of employment and accounting for 45% of GDP.
Yet a major paradox persists. Despite their overwhelming numbers, SMEs receive only about 18% of total lending from the commercial banking system. This figure is far too small compared to the capital needs of a sector that represents the vast majority of enterprises. The root cause lies in barriers to credit access. Most SMEs lack sufficient collateral to meet banks’ requirements. Even for businesses with repayment capacity, borrowing procedures remain cumbersome and time-consuming. These stringent conditions push access to capital beyond the reach of many SMEs and pose a major challenge to Vietnam’s 2045 development goal.
Politburo Resolution No. 68-NQ/TW mentions SMEs 20 times and emphasizes the urgent need to improve policy mechanisms to create a favorable and equitable environment for access to resources. Among these, reforming the credit guarantee mechanism for SMEs stands out as a key task, as it directly affects the country’s economic growth prospects in the years ahead.
Provincial Credit Guarantee Funds: A Chronic Bottleneck After More Than 20 Years of Struggling
Provincial Credit Guarantee Funds (PCGFs) were initiated in 2001 under Prime Ministerial Decision No. 193/2001/QD-TTg dated December 20, 2001, with the aim of supporting SMEs that lacked collateral but had viable projects. However, after more than 20 years, the effectiveness of these provincial funds has been almost negligible. From 2002 to 2022, PCGFs guaranteed only VND 4,272 billion (USD 162 million) for 2,450 enterprises—an average of about VND 210 billion (USD 8 million) per year, an extremely small figure relative to the scale of Vietnam’s SME sector.
Many localities have had to suspend operations due to poor performance. In Da Nang, during the five years prior to its dissolution, the city’s PCGF guaranteed loans for only 14 enterprises with a total value of VND 18 billion (USD 684 thousand), an average of just VND 3.6 billion (USD 137 thousand) per year. To date, the total capital of all provincial PCGFs is only VND 1,462 billion (USD 55 million) , even smaller than that of a small commercial bank, and therefore insufficient to generate macro-level impact.
The primary cause of this failure lies in the model itself. The decentralized provincial-level structure fragments resources and makes them entirely dependent on local budgets. Moreover, Government Decree No. 34/2018 stipulates that enterprises seeking guarantees must still provide collateral. This additional policy unintentionally creates a vicious circle: to obtain a guarantee, enterprises need capital, yet capital is precisely what SMEs lack.
Added to this is the risk-averse mindset of the management apparatus. When using state budget funds and bearing heavy legal responsibility, many fund officials choose to tighten conditions or even refuse guarantees to ensure safety. As a result, the risk-sharing role - which is the very essence of a guarantee mechanism - is effectively nullified.
These shortcomings show that continuing with partial reforms or patching up a system that is flawed by design will only waste more time and resources.
Building a New Model Based on International Experience
Experience from developed economies has shown that the State does not need to establish funds to lend directly to SMEs. Instead, the State should provide guarantees for loans and share risks with commercial banks, thereby encouraging private financial markets to function effectively.
In the United States, the Small Business Administration (SBA) has been a prominent success since 1953. The SBA does not lend directly but guarantees up to 85% of loans disbursed by commercial banks. This approach leverages banks’ appraisal capacity and networks while reducing risk for the financial system. In 2024 alone, the SBA guaranteed SME loans totaling USD 31 billion, creating approximately 824,000 jobs.
South Korea offers a lesson in the application of data and technology. The Korea Credit Guarantee Fund (KODIT) has built a sophisticated credit rating system that classifies enterprises by risk and applies flexible guarantee ratios ranging from 50% to 90%. Start-ups or higher-risk firms can still access capital thanks to higher guarantee levels, while the financial system remains safe. This approach both promotes entrepreneurship and encourages innovation.
The successful experiences of the U.S. SBA and South Korea’s KODIT point to a core philosophy: the State should not replace the market; instead, it should create the playing field and share risks so the market can operate more effectively. Drawing on international lessons and domestic realities, Vietnam needs to build a modern national-level credit guarantee mechanism operating on three main pillars.
The first pillar is the State, acting as the guiding compass. Through a central coordinating agency such as the Ministry of Finance or the State Bank of Vietnam, the Government would issue policy frameworks and set flexible guarantee ratios, ranging from 50% to 80% depending on sector, creditworthiness, and risk, while managing the overall risk portfolio rather than appraising individual loan applications.
The second pillar is the commercial banking system, serving as the capital transmission channel. With risk-sharing support from the State, banks would no longer act as dams blocking capital flows but would become smooth conduits, more willing to lend to SMEs and to view them as a promising segment rather than merely a risky one.
The third pillar, and the most groundbreaking factor, is digital platforms acting as risk-navigation compasses. The core issue behind banks’ hesitation is information asymmetry. A digitized, real-time data system would enable objective assessments of enterprises’ financial health, allowing risks to be identified accurately and promptly.
In Vietnam, pioneering technology platforms are already prepared to assume this role. A notable example is MISA Joint Stock Company, a well-established market player currently serving a network of nearly 400,000 enterprises and 60,000 household businesses. Through MISA’s MISA Lending digital platform, enterprises can proactively connect and share their financial and accounting data on a consensual and fully secure basis. This allows banks and financial institutions to obtain a comprehensive, real-time view of enterprises, reducing transaction costs and limiting bad debts. The effectiveness of this model has been proven in practice. Since early 2025, MISA has partnered with eight commercial banks and four financial institutions, helping SMEs secure approval for nearly 3,000 loans with total disbursements of almost VND 14,000 billion (USD 531 million). The average non-performing loan ratio is only 2.38%, lower than the market average and easily offset by enterprises paying bad-debt insurance premiums of about 2.5% of the loan value. This success demonstrates that when reliable data is available, banks are willing to provide credit. Therefore, a government guarantee mechanism combined with accurate data platforms from professional providers like MISA would serve as a powerful catalyst, encouraging commercial banks to further expand capital flows to SMEs.
Roadmap and Strategic Economic and Social Impact
Designing a superior model is a necessary condition, but successful implementation is the sufficient one. To bring a national-scale mechanism into practice, action cannot be rushed; it requires a carefully calculated roadmap with clear phases to fine-tune policies, minimize risks, and maximize effectiveness.
The first step in the 2025–2026 period should be a limited pilot to test effectiveness and build confidence. The Government could select Ho Chi Minh City as the pilot site, given its more than 400,000 SMEs and its contribution of 24% of GDP, while leveraging proven technology data platforms such as MISA Lending. The results of this pilot would provide a solid foundation for refining policies and mechanisms before scaling up.
By 2027, the Government could roll out the guarantee mechanism nationwide based on Ho Chi Minh City’s success, while introducing pioneering policies to support women-owned SMEs, minority-owned SMEs, and SMEs in rural and mountainous areas. This would not only be an economic solution but also one with profound social significance.
From 2028 onward, the credit guarantee mechanism could evolve into a multi-purpose tool, unlocking capital while promoting digital transformation, green transition, innovation, and export promotion. Looking further ahead, a Vietnam SME Digital Center could be established to support access to capital and provide development services, helping SMEs enhance sustainable competitiveness and become a leading force in the country’s industrialization and modernization.
Building a national credit guarantee mechanism does more than address short-term capital constraints; it carries strategic significance in realizing Vietnam’s 2045 aspirations. It is a concrete action to implement the spirit of Resolution 68, enabling the private sector—especially SMEs—to truly become a growth engine. When capital flows are unlocked, SMEs can invest in technology, raise productivity, and integrate more deeply into global value chains, breaking the vicious cycle of “capital shortages – low productivity – limited access to credit.”
This mechanism also promotes financial inclusion by channeling capital to rural SMEs and those owned by women or ethnic minorities, thereby helping reduce inequality and strengthen social cohesion. From a market perspective, it lowers transaction costs, leverages existing financial and data infrastructure, and avoids creating additional financial funds or cumbersome administrative bodies, thus saving resources and accelerating implementation.
At the macro level, it would serve as a counter-cyclical stabilization tool. In times of crisis, the State could raise guarantee ratios to limit bankruptcies and unemployment, as the United States did with the PPP program, which swiftly protected millions of jobs during the Covid-19 pandemic.
Moreover, the approximately 2.5% bad-debt insurance premium paid by borrowing enterprises would help maintain system balance: enterprises reduce their burden, banks expand their customer base, and the guarantee mechanism operates sustainably without relying on annual government budget allocations.
As General Secretary To Lam stated on August 22, 2024, in Hanoi: “SMEs play a very large role in the national economy, addressing the everyday issues of social life.” For this reason, a national credit guarantee mechanism—with the participation of the State, commercial banks, and digital platforms—is a step that reflects political determination and reformist courage. This is not something that should be done; it is something that must be done to ensure that every enterprise, large or small, has the opportunity to contribute to our collective strength. When SMEs are entrusted with confidence and resources, Vietnam will not only grow but also mature, realizing its goal of becoming a high-income country by 2045.
END.
See below on the Vietnam international financial center IFC. I am considering forming a private debt fund PDF to provide working capital loans to Vietnamese SMEs, a sector that is ripe for debt support and the returns to the PDF can be lucrative and reliable through frontend proprietary credit scoring that has been market-tested for the last 3 years and generated more than $1.3 billion of shortterm working-capital loans.
I aim to raise $100 million for PDF 1 and would like to have your thoughts and advice, and possibly leads to potential investors into the PDF.
Please let me know if you are interested in learning more. I include the English translation of a white paper that is related to this topic that was published recently.
Hope to hear from you, kp
BEGIN:
This article is published on Phuong Dong Magazine in November 2025; this magazine is a monthly policy-oriented publication with strong ties to the current leaders of Vietnam.
Title - Policy: An Open Mechanism for Small and Medium-Sized Enterprises
Pham Duc Trung Kien*
*Master’s degree in Business Administration, Economics, and Public Policy from Stanford University; currently Senior Advisor to U.S. investment fund TPG Capital and Chairman of the charitable social organization The Vietnam Foundation.
Vietnam is standing at a historic crossroads. If it continues to maintain the current fragmented and inefficient provincial-level credit guarantee mechanisms, it will miss the opportunity to transform small and medium-sized enterprises (SMEs) into a true engine of economic growth. By contrast, if Vietnam dares to break through and establish a modern, national-level credit guarantee mechanism based on risk-sharing principles and the power of digital technology, it can create a historic and strategic turning point, one that demonstrates the vision and commitment of leaders to removing long-standing bottlenecks that have constrained the private sector for many years. The long-term vision of a national credit guarantee mechanism is to create leverage for the development of a new generation of enterprises - more transparent financially, more competitive, and more proactive in innovation. When empowered, SMEs will become the pioneering force in the country’s industrialization and modernization process, contributing to the building of a resilient and self-reliant economy. The time has come for decisive action to turn the potential of SMEs into reality and to realize Vietnam’s aspiration of becoming a high-income country by 2045.
The Paradox Facing Small and Medium-Sized Enterprises
At the National Conference on the implementation of Politburo Resolution No. 68-NQ/TW, Prime Minister Pham Minh Chinh affirmed that SMEs are a key driving force of economic development. The statistics clearly reflect this role. Vietnam currently has more than 940,000 enterprises, of which 98% are SMEs, contributing over 40% of employment and accounting for 45% of GDP.
Yet a major paradox persists. Despite their overwhelming numbers, SMEs receive only about 18% of total lending from the commercial banking system. This figure is far too small compared to the capital needs of a sector that represents the vast majority of enterprises. The root cause lies in barriers to credit access. Most SMEs lack sufficient collateral to meet banks’ requirements. Even for businesses with repayment capacity, borrowing procedures remain cumbersome and time-consuming. These stringent conditions push access to capital beyond the reach of many SMEs and pose a major challenge to Vietnam’s 2045 development goal.
Politburo Resolution No. 68-NQ/TW mentions SMEs 20 times and emphasizes the urgent need to improve policy mechanisms to create a favorable and equitable environment for access to resources. Among these, reforming the credit guarantee mechanism for SMEs stands out as a key task, as it directly affects the country’s economic growth prospects in the years ahead.
Provincial Credit Guarantee Funds: A Chronic Bottleneck After More Than 20 Years of Struggling
Provincial Credit Guarantee Funds (PCGFs) were initiated in 2001 under Prime Ministerial Decision No. 193/2001/QD-TTg dated December 20, 2001, with the aim of supporting SMEs that lacked collateral but had viable projects. However, after more than 20 years, the effectiveness of these provincial funds has been almost negligible. From 2002 to 2022, PCGFs guaranteed only VND 4,272 billion (USD 162 million) for 2,450 enterprises—an average of about VND 210 billion (USD 8 million) per year, an extremely small figure relative to the scale of Vietnam’s SME sector.
Many localities have had to suspend operations due to poor performance. In Da Nang, during the five years prior to its dissolution, the city’s PCGF guaranteed loans for only 14 enterprises with a total value of VND 18 billion (USD 684 thousand), an average of just VND 3.6 billion (USD 137 thousand) per year. To date, the total capital of all provincial PCGFs is only VND 1,462 billion (USD 55 million) , even smaller than that of a small commercial bank, and therefore insufficient to generate macro-level impact.
The primary cause of this failure lies in the model itself. The decentralized provincial-level structure fragments resources and makes them entirely dependent on local budgets. Moreover, Government Decree No. 34/2018 stipulates that enterprises seeking guarantees must still provide collateral. This additional policy unintentionally creates a vicious circle: to obtain a guarantee, enterprises need capital, yet capital is precisely what SMEs lack.
Added to this is the risk-averse mindset of the management apparatus. When using state budget funds and bearing heavy legal responsibility, many fund officials choose to tighten conditions or even refuse guarantees to ensure safety. As a result, the risk-sharing role - which is the very essence of a guarantee mechanism - is effectively nullified.
These shortcomings show that continuing with partial reforms or patching up a system that is flawed by design will only waste more time and resources.
Building a New Model Based on International Experience
Experience from developed economies has shown that the State does not need to establish funds to lend directly to SMEs. Instead, the State should provide guarantees for loans and share risks with commercial banks, thereby encouraging private financial markets to function effectively.
In the United States, the Small Business Administration (SBA) has been a prominent success since 1953. The SBA does not lend directly but guarantees up to 85% of loans disbursed by commercial banks. This approach leverages banks’ appraisal capacity and networks while reducing risk for the financial system. In 2024 alone, the SBA guaranteed SME loans totaling USD 31 billion, creating approximately 824,000 jobs.
South Korea offers a lesson in the application of data and technology. The Korea Credit Guarantee Fund (KODIT) has built a sophisticated credit rating system that classifies enterprises by risk and applies flexible guarantee ratios ranging from 50% to 90%. Start-ups or higher-risk firms can still access capital thanks to higher guarantee levels, while the financial system remains safe. This approach both promotes entrepreneurship and encourages innovation.
The successful experiences of the U.S. SBA and South Korea’s KODIT point to a core philosophy: the State should not replace the market; instead, it should create the playing field and share risks so the market can operate more effectively. Drawing on international lessons and domestic realities, Vietnam needs to build a modern national-level credit guarantee mechanism operating on three main pillars.
The first pillar is the State, acting as the guiding compass. Through a central coordinating agency such as the Ministry of Finance or the State Bank of Vietnam, the Government would issue policy frameworks and set flexible guarantee ratios, ranging from 50% to 80% depending on sector, creditworthiness, and risk, while managing the overall risk portfolio rather than appraising individual loan applications.
The second pillar is the commercial banking system, serving as the capital transmission channel. With risk-sharing support from the State, banks would no longer act as dams blocking capital flows but would become smooth conduits, more willing to lend to SMEs and to view them as a promising segment rather than merely a risky one.
The third pillar, and the most groundbreaking factor, is digital platforms acting as risk-navigation compasses. The core issue behind banks’ hesitation is information asymmetry. A digitized, real-time data system would enable objective assessments of enterprises’ financial health, allowing risks to be identified accurately and promptly.
In Vietnam, pioneering technology platforms are already prepared to assume this role. A notable example is MISA Joint Stock Company, a well-established market player currently serving a network of nearly 400,000 enterprises and 60,000 household businesses. Through MISA’s MISA Lending digital platform, enterprises can proactively connect and share their financial and accounting data on a consensual and fully secure basis. This allows banks and financial institutions to obtain a comprehensive, real-time view of enterprises, reducing transaction costs and limiting bad debts. The effectiveness of this model has been proven in practice. Since early 2025, MISA has partnered with eight commercial banks and four financial institutions, helping SMEs secure approval for nearly 3,000 loans with total disbursements of almost VND 14,000 billion (USD 531 million). The average non-performing loan ratio is only 2.38%, lower than the market average and easily offset by enterprises paying bad-debt insurance premiums of about 2.5% of the loan value. This success demonstrates that when reliable data is available, banks are willing to provide credit. Therefore, a government guarantee mechanism combined with accurate data platforms from professional providers like MISA would serve as a powerful catalyst, encouraging commercial banks to further expand capital flows to SMEs.
Roadmap and Strategic Economic and Social Impact
Designing a superior model is a necessary condition, but successful implementation is the sufficient one. To bring a national-scale mechanism into practice, action cannot be rushed; it requires a carefully calculated roadmap with clear phases to fine-tune policies, minimize risks, and maximize effectiveness.
The first step in the 2025–2026 period should be a limited pilot to test effectiveness and build confidence. The Government could select Ho Chi Minh City as the pilot site, given its more than 400,000 SMEs and its contribution of 24% of GDP, while leveraging proven technology data platforms such as MISA Lending. The results of this pilot would provide a solid foundation for refining policies and mechanisms before scaling up.
By 2027, the Government could roll out the guarantee mechanism nationwide based on Ho Chi Minh City’s success, while introducing pioneering policies to support women-owned SMEs, minority-owned SMEs, and SMEs in rural and mountainous areas. This would not only be an economic solution but also one with profound social significance.
From 2028 onward, the credit guarantee mechanism could evolve into a multi-purpose tool, unlocking capital while promoting digital transformation, green transition, innovation, and export promotion. Looking further ahead, a Vietnam SME Digital Center could be established to support access to capital and provide development services, helping SMEs enhance sustainable competitiveness and become a leading force in the country’s industrialization and modernization.
Building a national credit guarantee mechanism does more than address short-term capital constraints; it carries strategic significance in realizing Vietnam’s 2045 aspirations. It is a concrete action to implement the spirit of Resolution 68, enabling the private sector—especially SMEs—to truly become a growth engine. When capital flows are unlocked, SMEs can invest in technology, raise productivity, and integrate more deeply into global value chains, breaking the vicious cycle of “capital shortages – low productivity – limited access to credit.”
This mechanism also promotes financial inclusion by channeling capital to rural SMEs and those owned by women or ethnic minorities, thereby helping reduce inequality and strengthen social cohesion. From a market perspective, it lowers transaction costs, leverages existing financial and data infrastructure, and avoids creating additional financial funds or cumbersome administrative bodies, thus saving resources and accelerating implementation.
At the macro level, it would serve as a counter-cyclical stabilization tool. In times of crisis, the State could raise guarantee ratios to limit bankruptcies and unemployment, as the United States did with the PPP program, which swiftly protected millions of jobs during the Covid-19 pandemic.
Moreover, the approximately 2.5% bad-debt insurance premium paid by borrowing enterprises would help maintain system balance: enterprises reduce their burden, banks expand their customer base, and the guarantee mechanism operates sustainably without relying on annual government budget allocations.
As General Secretary To Lam stated on August 22, 2024, in Hanoi: “SMEs play a very large role in the national economy, addressing the everyday issues of social life.” For this reason, a national credit guarantee mechanism—with the participation of the State, commercial banks, and digital platforms—is a step that reflects political determination and reformist courage. This is not something that should be done; it is something that must be done to ensure that every enterprise, large or small, has the opportunity to contribute to our collective strength. When SMEs are entrusted with confidence and resources, Vietnam will not only grow but also mature, realizing its goal of becoming a high-income country by 2045.
END.
Kien Pham
Imperfect Servant of the People
VN Mobile and WhatsApp: +84-98-5656-566
"You make a living by what you get and a life by what you give"
Sorry if you see typos. This email comes from a blind man on mobile device!
On Fri, Mar 27, 2026 at 4:19 PM Lam Nguyen <lamn...@redsquarevietnam.com> wrote:
Dear anh Kien,Please find below the article published on Bloomberg on March 27th, 2026, title: Vietnam Financial Center Takes Shape, Seeking Wall Street Links. Best Regards, QL./.BEGIN:Vietnam is seeking to create global investor interest in its nascent international financial center, envisaged as an entry point for funds into one of the world’s fastest-growing economies.
“There’s capital stored up all over the world that wants into Vietnam, but it’s a capital-controlled environment,” Rich McClellan, the center’s chief executive officer, said in an interview in Melbourne Tuesday, where he was meeting investors. “I’m probably doing on average three-to-four investor conversations every day.”The IFC, spanning Ho Chi Minh City and Danang, is part of a broad government push to attract foreign investment as General Secretary To Lam seeks to turbocharge growth to 10% per annum over the next five years. The plans call for tax incentives along with legal and regulatory sandbox mechanisms, though there are questions over whether Vietnam’s regulatory framework, market depth and currency convertibility are sufficiently developed to support its ambitions.“We have a lot of work to do to put the institution in place,” said McClellan, noting he’s been working on the IFC project for more than three years and building ties with Wall Street institutions, which he declined to identify.“I’m working a lot right now on internal rule books and policies, fee schedules, admission guidelines — all these activities that need to be put in place to actually have a working, functioning financial center,” he said.END.Lam Nguyen (Ms.)
Special Assistant
Mobile: +84-814-364-472151 Ton Dat Tien, SB02 Garden Court 1, Tan Hung Ward, Ho Chi Minh City, Vietnam
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