unlicensed socialization capital sources for credit program of lending to student

ABBREVIATIONS Viet Nam Bank for $ocial Polices C redi i Program of Lending to Student C onini un c Transaction Peini l.en‹J ing an ‹J Saving Group LIST OF TABLES, CHARTS Student lend

AC KNOWLEDG MENT

Attending Master Program Public Management (MP1³M) intake 04 is an honor for us

’Fl hii s is the course which collab‹iration between economic University - Hanoi National

I 'i u ii cm it› - n 1 In i› crsi tJ at top ‹›t“ Vietnam and Upsalla I University - a university ranked 62 of

\ !i 'i‘ I i u i sli i rite 'I use In i subject > vv c are ghided t‹i research b\ a thesis It was not as we

i u i i i.i ! I › ilii›u glii that the thesis ve il I be s er) simple and dull In contrast, this is really a crested peri‹›d and t ull of experience with new research method, fascination from the first

tune-co›nifc renc.e We have b•.en step fry step guide to identify pioblen‘is, determine the research m‹ctIh‹ido1ogy, data collection, data processing, analyze the situation then propose solutions

Many peonle have contributed to this thesis at several stages When works began, we re‹ce•ived enthusiastic help of library staff in the Hanoi National University, our colleagues in thte provision of documents, available data and information sources from their fact work In pairtiicular, we thank Mr Nguyen Van Ly - Deputy General Director of VBSP, Mr Lo Van Diuc — Director of student credit Board, Tran Thi Lan Phuong - Director of Planning and C‹upiital Board, Luu Hoang Hat - Deputy Director for student - General Department of

\’‹ ›c ii i‹›ii.i t ‘Frain ing - Ministry of Labour lnvalids and Social Affairs, Duong Van Ba - Deputy

I ii i‘c'c' t‹› i‘ eminent department - Ministry ct" education and training

[ lie li i st ‹›ull inc and the research questions have been read with great care by Dr Pham

V iii ’l’haug Vietnam suppervisor - National University of Hanoi, who has a lot of experience in the‘ ‹education field that we are making research We have been commented on the thesis striaxture, the validity of the research questions, scope of research Not only that, in the research prc›ciess, we always received his encouragement and contributions At stage of progress report,

we hiave received practical significance donations for the theoretical framework of the problem

by P'r‹› Sven Jungerhem, Upsalla supervisor as well as comment on the form of the thesis to corn|plete in progress

Thesis has been made clarify after the master thesis defense seminars with some consitruct i›•e suggcstions of the critical groups Particularly, direct comments of supervisors I‘n› tii V iet iiain and Upsalla

I diii :ick n‹›vv lcdgnient iv ould not be complete w tilt out mentioning others who c‹›n i r i htiicd hchind the scenes We are especiall y gratef“u1 to C’EMA and the sponsor Ireland has crc-al‹e‹t conditions Ie help us complete the thesis as well as this useful course

Last but not least, we owe a special word of appreciation to the coordinators of the progrrain Hoang Thu Giang and Nguyen Phuong Lan to create the conditions for a fruitful collalb‹›ration

Author group Dinh Mai Phoug l4oang Xuan Truong

All SI KAC T

I I it Ie: Socialization capital s‹i urccs for C red it Program of Lending to

2 Level: Final assignment for Master Program in Public Management

3 Authors: First name Surname

Group 6/4A:

- Dinh Mai Phong

- Hoang Yuan Truong

Credit tor students contributing to increasing the budget for universities and

c olleges while state budget is cutting down; Help student could go to universities and not to b›e dropout because of lacking money for learning; access opportunities for students with hiigher education, especially for the poor; further more it also creating quality human

r‹esources in the future However, funding is always missing, while the cost of learning, fOr

tlfie life of student increasing

Our aim in this thesis is solving problems for the capital incentive credit program

I ia pa rtiC ll l ar capit ill socialization is a good and feasible solution that we want to clarify

7 M crhoJ

7 I llcdu cti s e method: Study theoretical framework of the Law of Supply and

I 9ciii :inn t‹› dcicrm inc the hasic theoretical ct’ the thesis; Study some student credit models on the wo r1‹1 to follow the appropriates and improve the problems will be subject to conduct rcsc•arch; collect data from the reports of the ministries concerned, the website of the age-

nc i cs implementing the program

7.2 Investigation by questionnaire method: Based on the research question, scope

of i csearc h our group has designed the questionnaire to determine the demand for student l‹›a ns 1ionsehol‹1s demand and also make survey on léasibi l ity of the capital socializaiiOn thr‹ ›ugli cc›m ri bution preparedness level of pe‹›plc the support and agreed of policy makers

7 3 N l c l li‹›‹1 ‹it’ comparison, anal › his svnl hesis: B› the tools such as 5WOT, MIND MAP,

l'lt t3BL LM FREE to make general assumptions, the direction of problem solving that will

7.4 In addition, we also c‹›mbin e‹J of usmy some other methods such as: Ask

cx ;›en s(policy makers, Swedish inst rnc ttir, Vietnam ), the method of calculation of the value determined the index to enhance the pcrsuasi i’eness of the arguments in order to miswc• r the research question

II Re.sult & Conclusions

\\ i in the su p;a‹›ri and c‹›n tr i b uti‹› ns c» t cc‹›n‹›ni i c elements in society will help manv

×i n‹i me in p‹›iii li‹› ii seh‹›l ‹J » ‹i i 1’t i( ul t !icusclio l‹is gn loans to continue studying,

÷»n i’i hurting t ‹› the dci elopment education and training, imprcving :he quality of human

rc s‹›urces meeting the requirements of industrialization, modernization and development of knowledge economy

9 Suggestions for future research

Within the scope of our research, WC WOUld like to propose some feasible solutions

to implement socialized capital source for CPLS After capital 5ource meets current large demand for loans, it will generate new requirements, which is how student can reach more with this credit program, how effective does the program must be managed in order to

p r‹› m‹u e the credit effect and making up the social goals ct’ equality If have chance, we

» ‹›ii l ‹l I i k e t ‹› c‹›ii ii w u c st u d J i iiy in a higher research

16 C un t ribu t ion of the thesis

In this thesis, the problem of lacking capital considered scientifically and systematically associated with the general theoretical basis, while also mention to the specifics of the credit program of lending to student and the actual results of this program in recent years to make some basic comments and some high feasible solution, throu b³ which the loan funds will be added to meet the borrowing needs of a large amount student and households

11 Key words: Capital, socialization credit, incentives, State, Student

FABI I UF € (CN I k.N F

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2 PURPOSE AND RESEARCH QUES flCl N

4.2/ ?urvcv method with questio

4 3 k1et li‹ids ‹n comparative, analysis, synt

5 €J bJ LC I AND SCOPE OF STU

CHAPTER II THEORETICAL FRAME ABOUT SOCIALIZATION ON CAPITAL

SOURCE OF CREDIT FOR STUD

1/ NGTIONS OF SOCIALIZATION CAPI4 AL SCI URC E FOR CREDIT OF LENDING 4’O STUDEN

11 LAW OF SUPPLY AND DEMAND FOR STUDENT CRE

1 / Definition of Supply and Demand about student credit 8

I C RJ FU T PROGRAM OF LENDING TO STUDEN

II / SOME RESULTS ON CAPITAL SOURCE AND LENDING TO STUDENT (2007- 21)1 1 1 14

1 / Results of implementation 14 2/ Evaluation of CPLS implementation 1 6

I\' C API I AL 1 OR CR EDI F PROGRAM IJ I ³ LENDING TO SJ UDEN F 18

I 1sscssm cnt ot the abilit› to meet capital lb 2/ Status ct‘ current mob ili z iii ion capital 20

› I he I i iii i rim inns i n the rim sni g capital 2 1

1 I I ‹1J' I 1:R I V S€JCTAL IZA I UN C’API I AL SG1? RCES F‘GR CREDIT PROGRAM OF

1 CN LII NG TO S I UDEN

1/ EFFECTS OF RAISING CAPITAL SOURCES FOR THE CREDIT PROGRAM OF

LI ›NDING FO STUD

1/ ContribUtlOn to ‘increase the budget of universities and colleges 22

2 C rearing conditions for expanding higher education system and colleges 22

3 Social Security (equality/access opportunities for th

4 ! › •c t thee needss of hUNli aRr rcsourccs in tlic

5 ?iii‹J e r i supporting 23

I I SP U I I ltJ14 5 I O SGC l A l.l ZE CAPITAL SOURCES F CR CREDIT PROGRAM OF

I I N IJ IN G TCl STUB

1/ Solutions to mobilize various capital sourc

2/ Group of solution implemented various forms of capital mobilization 28 CHAPTER V: CONCLUSION

REV ERENCE

A PPEN

1 RESULT OF QUESTIONNAIRE SURVEY FOR STUDEN

2 JIESLJ LT OF QUESTIONNAIRE SURVEY FOR HOUSEHOL

JD I ³S1 11 F CH QU EST I ONNA IRE SURVEY FOR POLICY MAKERS

ABBREVIATIONS

Viet Nam Bank for $ocial Polices

C redi i Program of Lending to Student

C onini un c Transaction Peini l.en‹J ing an ‹J Saving Group

LIST OF TABLES, CHARTS

Student lending quantity Student structure as beneficiaries Student structure by type of training Planning emplementation

Learning cost of student - student survey Learning cost of student — household survey Socialization capital sources structure survey

CHAPTER INTRODUCTION

I / It 1.ASt l Y F tl lt SI H.J UT C H GSEN:

I i en i i p r‹› i‘:tin 1‹›r l ciul i ng t i› student is incentives loan program tor tamil i cs with

Jr i l‹J i cii at tc riding at the LJ ni v crsi t y, cu lleges and technical secondary schools, vocational

›cli‹›ols under decision No 157/2007/QD- TTg date 09/27/2007 of the Prime Minister This program has great influence in society, has 2.5 million students are children of more than l 9 million families in lending program to universities Because this credit program has fast growth Ie.tding to capital fOr loans is always insufficiency Student borrowing demand often happen

l ‹›cu s on the beginning of school year, the first semester, so the capital source of this credit pr‹›gram has alwavs been active Solve the problem of lack of funds for lending to student loan

Ji r‹›grani is to address the most importance problem recently, this is also the policy of the ( i‹› v rnmen t cxp•cted

\\’e then 1‹›re decided Ie choose the topic "Socialization capital sources for Credit

l 'r‹i gra in of Lentling to Student” for our thesis After resolving the problem also means that in‹›re student who need money will have money by the loans could go to university, contributing

to the GOVem ment 's gOal is to promote and develop education and training human resources for the future, to achieve the objectives not let any student must dropout of university, college, vocational training because of financial difficulties

2 / PURPOSE AND RESEARCH QUESTIONS

2 1 / Purpose of research

To overcome these difficulties in capital mobilization, preliminary conference program three years of Credit for students, Deputy Prime Minister Nguyen Thien Nhan has asked s‹›‹ ia l iza i i‹›ii ‹if the credit program for lending to student, in order to supplement capital source

i ‹ ›i Hi is pr‹›gra m st ri i cs to 20 1 2 encourages financial institutions, credit and other economic /L i ‹› u ps c‹›rp‹› ra t i‹in s IlHd state enterprises of all economic State economic join together to pcr iomi credit program for student

Our purpose is to solve difficult problems in capital source to this program As Cill cu l ating about the demand5, the total capital of the rollover loan of this to the year 2013 is estimated at 50,000 billion VND, of which the State budget capital 16,000 billion, the remaining ciipi t al allocated to VBSP mobilizcd about 34,000 billion VND Currently , VBSP mobilized

On l; I 5,00G bil1ic› n VND Thus, to maintain the rollover capital fOr the program (50,000 billion

V N D J average annual VBSP should be added about 10,000 billion VND The most cffective so1tii i ‹›n recently is socialization the capital Our thesis will propose solutions in order to

2

I Hew d‹› students need loans for supporting their study?

2 What is the feasibility of social ization capital sources for credit program lending to

3 What should be done in order to socialize capital for CPU at Viet Nam Bank for

?‹›cial Pot icies?

3/ SIGNIFICANCE OF SCIENCE AND PRACTICE OF RESEARCH

Thesis will show the results of the CPLS recently; analysis of existing capital structure

n n «an ‹›1 capital m‹›hilizat ion to this program Proposed solutions to socialize capital program

i mi«u c c api i.it 1‹»r lcxi ns to nicer the needs of student

? ’ e I i‹›pc- i’nat our research will bc implemented as soon as possible, contributing to the

¿‹›.i t s Shut rue prOgram has reached out We also expect this is useful document for other ministries, policy makers at the macro level in completing the policy for the be other

beneficiaries out side of student

I li e‹›rci i ca J l rame w‹›rk: We selected the Law of Supply and Demand to be theoretical

w i+s l ‹›r our thesis With this theoretical framework we want to confirm the feasibility of the

׋›cia1ization of capital which is one of the solutions to increase capital sources for this credit

program entirely consistent with the most basic mles of market economy It will resolve the main goal of research which makes Supply equal to the Demand for CPLS

- Research model: we had researched some lending model to student from other countries such as Korea, Singapore Specifically, here we provided the model of CPLS in Korea to see the

variety ‹›f capital in whole social participating in CPLS that is very successful, a model of social capital ‹›f a country with many similarities with Vietnam show the feasibility if applied in the can ‹if Vi c• tnam

R escarc hing documents which relate to the CPLS of the Govem mcni the Minlst Of

!l ]i1J4 C C $ U H C ilt iU ll lnd F raining State Bank and of VBSP inc hiding some documents, reports:

- I n addition, we had collected data from some website:

+ Research on the website ct VBSP http://www.› bsp gov vn

+ Research on the website of the Ministry of Education and Training in collaboration

» ith the L•ibour Invalids and SoClal A tt airs: ht tp://vayvondihoc moe t.gov vn

* Advantages:

-lncxpciisive: Recause the theoretical frameworks, models arc available the research

‹i‹›cum cnts are available We could collect in the library, reputable website that is not costly

I !ase of implementation: With the deductive method, our group does not have to

‹ i › c’ i ‹ ›p c a I tm ti on criteria: n‹›1 deep survey on a large scale that only inherited the research

l ase ‹›l appl icat ion: ’Fhc problems were made clear will be applied to the problem sh‹›uld be studied; we can apply the recognized results for comparison, become standard data in

‹›r‹ler to compare with the subject survey Then we have important reviews which are premise

l oi the proposed solution

- High convincing: 4’hrough research methods of relevant documents, especially the legal cloc uments of the Government, the regulation documents on lending, creating capital mechanisms for lending to prepare for the thesis, such as needs identification, selection and

l iniit the scope of topic, find sources of support, finding the research objectives; the documents

ve hich need an‹J appropriate tools to investigate

* disadvantages:

- Qual itv ‹›t ‹documentation may not be high: As varied source of documents, so it can be

i nacc tiiat c• documents about the content, data can even be completely false documents

- Studying various types of documents: After collecting document and data, we have to

review documents to determine the accuracy and suitability to be applied to solve the problem

that wc want to research

4.2 / Surv£l7 ×ethod with questionnaires

To find out and determine the correctness of the solutions for the research questions, we hat e chosen the method of questionnaire survey for policy makers related to CPLS, households

w it li children in school and students to capture the demand for loans, the feasibility of the

s‹›c i a l i zation of capital as the below table:

4

€

tTuhlc 1 List of s’ urvey)

This method helps us to answer questions about the loan needs of students for support

I hci r learning, not only from students but also from the their parents for higher accuracy In ad‹J i1ion, a survey with policy makers, we can identify the support of the policy makers for the socialization of capital for CPLS which shows the feasibility of the capital socialization

* Questionnaire survey method was conducted as follows: Sample survey in some lucal and some universities:

For the household survey, we performed in three localities: Tan Uyen District of Lai t’hau proi ince: Mai Son district of Son La province and Thanh Tri District of Ha Noi These 3 places w hich we had worked at So we send the questionnaire to transaction office and asked

i l imn gi e 1‹› the h‹›useho Eds i‹i fill in, get the results and send back to us

l or students, we per t’Orm at iwO localities: North Western University in Son La; Ha Not National Economics University and tht2 University Building in Ha Not We are as the VBSP s1a l’f that needs survey the loan demand of students, we ask Student Management Department give the questionnaire to student and take back

For policy maker concerning to CPLS, we give the questionnaire directly to them

* Advantages:

- The questionnaire survey method allows us have conclusions or comments are highly rel table because the questionnaire was deVt2lO éd into a tight system, arranged with the logical s‹cJ u‹n n ‹›f the plan reply to the respondents

I h is iu et lu›d is eas› i‹› implement ct data collection in a shon time- u ith many

in < i ’ii•‹1 p« ›plc inc rcpl; can i‹› calculate the rate and easy to recognize bv mathematical

- Evaluated the thought o1 investigated people

- Most unaffected by cx terHil ilc tors to the investigated people

- Survey results created the data sourcc which can be compared and c l assifie‹l t‹› solve

re ,earc h problem

' Disadvantages:

- Not achieved in the case illiterate households surveyed

- N c› cc›n t rol people surveyed did not fi l l out questionnaires

get cn c›ugh number of the emitted questionnaire

- Almost people do not answer the “other idea”

- Improper questionnaire structure, questioning may distort the received information ' 4.3 / Methods of comparative, analysis, synthesis

Mainly qualitative analysis, based on comparable data informatiOn which related to research problems have been synthesized The data collected would be revised, coding and analysis During analysis, information processing, these tools support such as SWOT, PROBLEM TREE, MIND MAP, SMART, Force Field Analysis have been used flexible appr‹›priale for each type factors or research information

" Ad i antages:

- I akc adv aniage of available tools to analyze problems systematically to research

-‘1’1ic problem is approached in a scientific and reasonable

-- EEaassyy ttoo iiddeennttiiffy research prro ob blleem mss,, research ob’jeeccttiiv veess then prroovviiddee the righhtt solution

* Disadvantages:

- Most of the analysis results are qualitative which should be re-tested by actual survey

- There should be more understanding and logic

4.4 / Expert method

In process of thesis implementation, we regularly consult experts: Supervisors of

V ie inamese and Swedish

Fhe synthesis analysis and evaluation documents and data from CPLS, we always get

i h fret p an ice ot the VBSP leaders, agencies and departments which involved

I x pen iii ethod is in› esligai ing mcthOds of assessment experts Sweden and Vietnamese

‹›ii the issue we are studying In essence, this is the method that used intelligence exploitation opinions of highly qualified experts to examine and review issues to find the optimal solution to the pr‹›blem we are studying Expert method is essential for our research not only in the research process brit also in the process of testing, evaluation, or even in the propose research hypotheses, selecting research methods, strengthening the argument

I See "Sampling and tl ata collection in ecoiioni ie research"- Dr Nguyen Van Ngoc- University of Nha Frang

6

Ad› anlil fiS U $’ I hi S IT1eth‹›d are cc‹inomi c significance: it saves time, effort and financlal

i ׋› i a ‹ cs l ‹›r c‹›n‹lnct i n g research I3u t it's m‹ist ly based on intuition ‹ir experience of experts, so n×c i‹› c ‹›‹›rdi n ate w it li ‹›ilicr methods

5 / t3BJ F.€ T AND SCOPE OF STUDY

I wo objects which are concerned in our thesis are the students who have demand for

sc ho‹›l loans and capital loans for those students

Gn the research scope, we just go on l Oan demand research and ability to meet capital

s‹›urces ot beneficiaries under Decision No 157/2007/QD-TTg of the Prime Minister, the sJ›ec i t i c beneficiaries are the poor households with incomes equal to 150% of the poOr,

households with unexpected dlf ticultiés, Orphan students and some other beneficiaries such as

‹Jc•mo bili zed soldiers, rural workers to vocational education Regarding the research period was

$1 () J II tl (17 to 20 1 1

7

€ HAPTER II TH EORETI CAL FRAME ABOUT SOCIALIZATION ON CAPITAL

SOURCE OF CREDIT FOR STUDENT

1/ NOTIONS OF SOCI ALI ZATION CAPITAL SOURCE FOR CREDIT OF I.F.N llING TO STUDENT

In economic field, socialization has several different but related connotations In

‹›‹: i.ii in ccon‹›mics the term usually refers to the process ot restructuring economic i ‹

‹I i< i i ‹› n n›w ard produc ing goods and services directly for use and away from

i ‹ ‹i ix i rig i ‹›r pri v arc pr‹i li t along wi º h º he en‹i of the operation ct the law of

‹api ta l isni In its most deV t2 lO ed form it entails t.he end of moneta.rj valuation and

i›u›netary calculation in the production process 2

According to Marxism - Leninism, the "socialization" shows the transformation from the personal nature to the social nature In this case, it is also referring to the transformation from one to the other ’

In Vietnam, referring to socialization in some fields: "Socialization of education, health, culture, sport iS tO ITlobilize and organize the wide participation of the people, society in the

dt?ve1opment Of that to gradually raise the enjoyment level of education, health, culture and

sp‹›rts in the development of physical and spirit of the people ' 4

I fans the nature of social izat ion is mobi lizin b ²he potential of human and material i’‹s‹ ›urces II nan c ial resources of the entire society, on the basis of innovation management mechanism and diversify the forms of activities and investment resources, innovation role and res;›onsibilities of the State, building the community responsibilities of the Party, State and Associations, economic organizations, social and occupational organizations

From the basic definition of "socialization” above, can be understoOd that "socialization

Cil i1i1$ fOr credit program of lending to students" is mobilizing and organizing the broad

p:in icipatiOn of organizations and people of the whole society to the development of education,

in other words that is the focus to mobilize enOugh capital sources to establish lending funds in

or dcr to support student on learning costs

I I / LAW OF SUPPLY AND DEMAND FOR STUDENT CREDIT

I / definition of Supply and Demand about student credit

llcfin it ion ef Hem and a b‹›ut student credit

l3em and ct student credit is the quantity of loans that borrower wants to borrow at each intcrest rate which is acceptable in a certain time at a certain location

' I A tt o !Ncura th’s concepts o£ socialization and economic calculation and his socialist critics, l 2-2006

I'.Mac and Ph Eº blcs — Full set — P46

8

* Hefi niti‹i n of Supply about student credit

Supply of student credit thai is the amount of loans that lender wants to make loan to the

in ak ct in a ccrtain time period for each interest rate at a certain location

2 / $uppli — Demand balance in student credit

I ‹›i i‘csearc li ‹j ti csl ion p‹» scd n‹›t enough funds to provide loans for students who are the I› n‹ tic ia r ies, w hich means ”Supply smaller than demand" by theory of the law of supply and

‹lcm and - application tor market currency as the above analysis we can apply some of the following measures: Increased adjusting the volume of transactions; adjusting prices; multi :id |ustment (both loans and price)

How cver, there is not much choice in solving the problem ”Supply is smaller than

‹lemand” for CPLS Due to preferential credit program is one of the major policies of the

I i‹› eminent in the development of human resources for the future, cOntribute to ensuring social

security should the conditions for the program are also preferential direction to the borrower; the interest rate decided by the Government in each period Therefore, constant prices (or little

i rim ‹'asc 1 can only enhance the mobilization of capital through various forms to create many

l l l tl l k $ tlil lJ8 ltl nicer loan demand The capital increase, creating more loans to meet high loan

‹demand is entirely consistent with the Law of Supply and Demand - this also means socialization capital to generate larger funds in order to solve the problem "supply smaller demand" On the theoretical, it is entirely feasible

III MODEL OF STUDENT CREDIT IN KOREA

Korea is a country that has many similarities with Vietnam, especially in culture and cu.stoms In 2008, student numbers are: 3,562,844 students (about 7.2% of the population), with 70’ o of university, 220 » college and 8% at the graduate Along with the strong development of education, the Korean government has created capital source policies, cost recovery for colleges

a n‹l unix ersities support for the cost of learning for students through the appropriate credit

p i‹›gi am t‹› each beneficiary

C urren i l y Korea has 7 credit programs for student with many capital sources from many

c «till t l n4 ie SG C lCi FS of society :

- Government Employees Pension Corporation (I 967) — Capital source: Government (St.ite and local)

- KOrean Teachers Pension Fund (1976) — Capital source: Government Annuity fund Korea Labor Welfare Corporation (I 987) — Capital source: Industrial accident

c‹›n i pc nsaiion lnsurance fund

- Ministry of Labor ( 1 'J 95) — Capital source: Employment insurance fund

- Korea llesearch Foundation 1999) — Capital source: KRF (Korea Research FOUfldation Fund)

\ It Al I i‹» eminent I i n armitec‹1 1.t›an Scheme (20115) — Capital source: Commercial Danks

M ini sir› ‹›1 I\duration’s Income C ont ingen i Loan Program (2010) — Capital source:

I ‹›veriimcni via sale of national notes to Korea Student Aid Foundation

Each of these programs for different beneficiaries, with different interest rates, different

‹aJ›i1a l and different aims The Korean government has created a very diverse sources of capital

I n other words, all of the mobilized economy resources have contributed to the success of student credit program This is a good model of capital with which the we can refer to applied re-search problems

CHAPTER III SOURCES CAPITAL CREDIT PROGRAM OF LENDING TO

STUDENT REALITY

1/ CREDIT PROGRAM OF LENDING TO STUDENT

G‹›vernmen t issued Decision No l 57/2007/QD-TTg dated 27/09/2007 about credit for

i u‹1wii this dcc isi ‹›n takes effect as from October 1, 2007 Specific policies related to loan

J u ‹ › n inns i ‹›i students as lot l ‹›w s:

I / copc ‹›l” aj› plicati‹›n

C redi i for student Policy be applied to support disadvantaged student have contributed to

c over º he cost of learning an«× a.ctiviti•s of st'udent in time at the school incl iidiHg tuition; tunic pr‹›curement fees, books, school fac li ies, the cost of food, accommodaticn and travel

2/ For the borrower

Student has difficulties attending university (or equivalent university), colleges and at the training base was established and operated in accordance with the laws of Vietnam include:

2 1 Orphaned student from either parents or one parent only orphans but who had no work capacity

is a memher of the household in one of the beneficiaries:

1'‹›u r households under the standards prescribed by law

- I louseh c› l d income per capita up to I 50% of per capita income of poor households as prescribed by law

2.3 Student whom family financial difficulties due to accident, illness, natural disasters, Cres, epidemics in the period of study certified by the People's Committees of communes, wards

or townships where they reside

2.4 Other beneficiaries: Due to government regulations appropriate to each stage, as si›1‹licrs go to school, vocational training of rural labor

3/Lending Method

Lending to student through the household manner The household representative is the

pn •‹›n d irectl y responsible bOf TOWlng and repayment Where both lyrical and orphan student or

‹ n ‹› I par cms ‹›nl orphans but who had no work capacity, will be borrowed direct loan at a

h:ink « lien the school located

year onwards students must be certified by the sch‹›o1 about studying in

sc li‹i‹il i incl n‹›i he sti1»|cc I to adna inislrat ivc sanctions or more ‹if the 1‹›l lowing acts: gambling,

‹I i u _ u n ‹l i c i i‹› n inn i ind sni uggl ing

5/Loan amount

I he maximum loan amount of is now 1,000,000 VND/month/student, one-year loan shall n‹»t exceed 10,1100,000 VND, not dominate the quantity of student having loan in a household

6/The lending period

- The lending period is calculated from the date the loan begins to receive the loan until full repayment (principal and interest) are recorded in the credit contract Loan term including

dlSf›ui‘sal ii› n c• and i epayinent period

The repayiu cni pe rod is calculated from the date the loan first debt to the date of full rcpa› ment (principal and interest) For the training program and training time not exceeding one

Bill I e rc pa› mcn t period by two times the maximum loan disbursal ; for other training

Jv‘‹›gi a ms inc max im u m repaJ ment term by term disbursal loan Repayment period is divided inn» the schedules

* Example: A student in university for 4 years will be borrowed as follows:

- Number of consecutive loan is 4 years x I 0,000,000 = 40,000,000 VND

- The total loan time: (4 x 2) + I = 9 years

7/ Interest rate

DecisionS Of Government in each period

- Incentive interest rate for program is 0.65%/month

- Overdue debt interest rate is equal to 130% interest rate loans

5/ Payment of principal and interest loan

- The loan tcrm development (learning time) for the borrower not to pay principal and rna i est: l‹›an interest is calculated from the date the loan to get the first loan principal due to date

- For the borrower have to pay principal and interest loan for the first time immediately after student have jobs and income but not exceeding 12 months after finishing the course

9 / Preferential interest rates in case of early repayment

Where the borrower has repayment commitments in the credit contract interest rate charged will be reduced by interest payments

10 / Adjust the repayment period, extension of repayment and overdue

Bv the end ct repayment period, the borrowers can not repay the deht by difficulties, they must make a written request ti›r extenslon shall be considered for debt rescheduling for hon ‹›u c r: ex tension period with a max ini uni 1/2 repayment period

|2

In cases where the borrOwer is not a payment by the end of repayment period and not

at towed IO extend loans, the lending hank transfers into overdue Bank lending to coordinate

with 1(›ca1 governments, political-social organizations have collecting debt measures

I I / Risks of loan

Ihc debt settlement risk due to objective reasons shall be made in accordance with the

i e¿ulations on debt settlement risk in accordance with the Government regulations

l2/ Responsibilities of agencies

M ini slrv ‹›t Finance shall coordinate with t hc Ministry of Planni •b and Investment

i I I ›c.nc ciu n a l sources from State budget for funding to student and subsidized interest rate

º$ I ! ’ k i J C fifi l4J il r l fit IU QJ ‹ice ter ‹he bank to make good loans for this program

- Ministry ct’ Education and Training, Ministry of Labour, Invalids and b“ocial Affairs,

‹›ther ministries:

+ Direct the universities, colleges, secondary vocational schools and vocational training institutions under the management to coordinate with local people committee and the lending bank im plementation of lending to student policies

+ Direct the universities, colleges, professional secondary and vocational training facilit ies to perform validation students who are studying at the universities qualified loan regulations in Decision 157

+ People's Committees of provinces and cities direct agencies and local People's I’‹› i » r i itces i‹» implement the credit policy for student as prescribed by law and Decision 157

- tJ rga nizat ions and individuals that employers are already borrowing student under the

pi ovisions of Decision No 157 shall supervise and speed up student transfer money to pay debt through families or pay direct to bank

- Lending bank is responsible for guiding loan application, order and procedures for loan, repcyment period, repayment amount, extending repayment, overdue Mobilizing capital for a‹ld’t ional capital sources for program Coordinate closely and regularly with universities, c‹›ll:qcs, and i ocational training institutions in the process of lending to loans used for proper

p u rJ•oses, creating favorable conditions for student in receive loans and pay for college tuition

* Loan distribution, payment and collection

I ask ‹›1’ lending to student is implemented by VBSP under the Got eminent assignment

I lie I I'1 5 |est ‹1cpl ‹›; c-d m‹› re than 4 years hut had a great balance, accoun tl ng for over 30% of inc ‹›a n pr‹› grani ct‘ VBSP currently VBSP is a peculiar bank of the State of Vietnam VBSP aas established and in operation since 2003, operating not for profit, lending credit programs for the '›eneticiaries at the request of the government to target poverty reduction, job creation and soc-i.it security

II / SGM F HESU LTS GN CAPITAL SOURCE AND LENDING TO STUDENT (2tl07-2011)

1 1 Itesults of implementation

Finn the implc m en tiii i ‹›n of credit programs in late 2007 student f ér, lending VBSP

› in' \ LU $3$l l X IC ilC F U N s the c‹›un1rJ from cities to i i I lages in remote areas, with propagation in

,ii t›u s i ‹›rm s as n ew’spaper radio, television, Web, public program on 100% of communes in

the c‹›un1r y, communicated to the schoOl about program, most households and students all know

ih i » credit program Advertise on most households in beneficiaries to the demand for loans will

l›e bOf TOwed and the easy in borrowing procedures, the registration and commentary loans

l›c.ief iciarie clc c up them the x illagcs

1.1/ The capital and outstanding

To 31 /12 201 I , tire total capital - outstanding of this program reached 33,552 billion

VN H up 30,745 billion compared with 2007, increased 1 I times after 4 years of

i iiip l emen iat ion, the average annual increase 7,686 billion VND 7 Regarding capital structure is

st i I I target› dominated the State Treasury loans and State Bank loans; capital from bond issue

!1 il L ill F i f (l[l I years, the rest mobilized on the market very small, particularly 2 charts

(Chart 1 Totul outstanding — capital source of CPLS)

Over chart of growth capital - outstanding will also show any shortage of capital for len‹.ing to the program is due to rapid growth of outstanding, while capital structure in the table

belt w we see the panoramic any loan tunds for the program, so VBSP can not raise major Cit 1al in a short time in school year so most loan or advance to the State Treasury, State Bank lending n hich is actually temporary ot the State Budget for immediate disl›ursement, in fact this

is a -apital, is part of the state hudget was planning other item in the range of the state budget

14

Loa i›s a i›‹I Ti eaui i y i eq›onse

• State Loai› ba‹›k

• State Bii ‹lget (f ‹i n‹l ci e‹lit

1.2 / Beneficiaries

(Chart 2 /"apital structure of CPLS)

To 31/12/2011, total student borrowed through program is more than 2.5 million, accounting about 50% of student in the country, averaging 13.5 million loans for one student ', expression of specific student loans over the years:

5Charl 3 StuJent leniling quantity)

In addition, we also collected data for each beneficiary in loans (5 groups), which mainly 1‹•ciis ‹›ii three main subjects are poor, near poor, difficult situations, thereby loan funds that are l‹•c ii׋‹I ‹›n t wc i i ¿1it the object should be concerned as the following diagram:

" t’P1.S thematic repon — 20 I I - VBSP

The number of students divided by

the borrower (2011)

,ºChar' 1 Student str ucturc us bcnef ciai ivs)

Divided fry type of training, we can see the loan program to niect all types of training as

‹ducat ion system of Vietnam today l‹owevei, looking at the data we founci that most fOcused on university, college, Intermediate, there are few other types, this is not due to other types of loans lhd l ilre lost that actual education in Vietnam is going in one direction is not sustainable

Students by type of training (2011)

׋›ci'fl ‹u‘ganizai i on s at district commune and credit and saving group; drastically and the depth

‹› l leadership ar d promptly remove obstacles to program done quickly and properly funds to beneficiaries

- Particularly, VBSP has undertaken measures to strengthen and improve the operation of cre‹1il and savings, the activities entrusted to the organizer unions at all levels of the Organization transaction mobility and transaction Commune Current network o1 over 200,000

(f Q ()› end 011 the villages throughout the country with more than I 0.000 CTP of VBSP are

th c• iii p‹›rtanl ta.tors in performance program over 4 years, and made democracy from the grass

16

i ‹•‹›1s p ri hl ie contributing to the socialization o1’ program activities, creating a high consensus of

iii c ‹mm i Item l ‹›ca l iui t h ‹›riti cs and people

l 'i‘‹›pii ga n‹1a cx te ns i i e content ct the program ‹›n the mass mcdia to at I pcopl c as well as

4 = il l‘t 1 C1 il l ltlR $ CVf l has to know to conduct and coordinate mutual monitoring to ensure

.arogram is made public people Home and promptly déteci eXl5ting deficiencies and overcome .Or ganizations scheduled transactions fixed, publicize policies, processes, procedures, list of

i:borrowers in the transaction of cOmmunes, wards and townships

The unit is responsible for implementing the program thoroughly enlisted the guidance of

I he 1‹›vcrnment, make good working relationship with the cooperation of relevant ministries,

I hC [1c•!ltl C3l social associations, thC local boveniNit2iit in the implementation process so that

luc difficul ties have been promptl j and seck rerredies

- The implementation of the program units work closely together, keep up the difficulties

i ‹› c‹›iu in n‹› us l › stu‹1J and improve lending proCedures simple and convenient for the borrower,

\ ’I be O lJSur i n the public debt management Conducted VBSP change loan book, every

i i‹›usc• hold will only use a loan bOrrowing books instead of the debentures, contracts, contracts to marriage the loan debt of households To facilitate schools and Committees at all levels, the piareu ts, student and units are used labor to grasp student loans, VBSP and Ministry of E.ducat ion and Training has successfully built a website "school loans", create conditions for p›aitic ipa1ion in the management organizations as well as information sharing program

- The problems are proposed with the ministries and government policy tO supplement

siui iahl c for life During implementation, VBSP was promptly recommended to the Government o›n policies for student loans after graduation to military The small action but as it was excited

b y people and comfortable learning to a new career opportunity Monthly interest collecting

tr-‹i n I TP i I’ the borrower needs and have conditions of interest paid during the time of

‹I is ›u rsciiien t i‹› create awareness for the gradual repayment of loans while reducing pressure on interest payment of principal loan when due

- To create favorable conditions for family and student in the loan and loan use, VBSP in cc»l adoration with the Bank for Agriculture and Rural Development of Vietnam, Vietnam Industrial and Commercial Bank issuers ATM card titled "Students establish the business." The deployment of disbursement over card is very convenient, safe and significantly reduces the cost of" circulation, storage, transportation of cash

DCCISIOR No I 57/2007/QD-TTg issued promptly and gained popularity, contributing to ecJ u.i lit J of education in society In the pfocess of implementing, VBSP a direct lender has

i c c‹ i « ! the attcn ti‹» n and support c›f the Ministry: Ministry of Finance Ministry of Education

ii in I i a, n i rids June 11.ink ‹› f’ V i ctna m Minist r› ct Labour - ln va l ids and Soc rat Affairs, Ministry

‹› i 'l i in i i n _ and I in esini cnt: Ass‹›ciiii i‹›n : ltte Vietnam Women's Union Vietnam Farmers

17

A›.s‹›ciat ion Vietnam Veterans Association, thc Communist Youth Union of il O Chl Minh, and

kcy committees local levels Especially VBSP always get the directiOR Of the Government's

regular timely difficulties, especially funding for implementation through the public school

p r‹ ›grani Thanks to preferential many students access to program, disadvantaged households in the financial risk of dropping out of school, continue their learning

IV / CAPITAL FOR CREDIT PROGRAM OF LENDING TO STUDENT

1/ Assessment of the ability to meet capital

Total l‹›ans t c›r student reach 36,788/ 41,000 billion VND on 3 I 12.201 I , as planned or

;•« red dent.i n‹I reaching 900 A l the plan '; over the years also have not completed the plans

I i !‹ i.in I i c×se n v this plan is a loan aggregatc l oaa dcmaad sui vcy from the village up anlt

t li r r› u gh this a l sc› can assess the situation does not meet the capital demand loans, in p:uticular the following chart:

(I’hurt 6 Planning implementation)

smother aspect to be analyzed is the loan amount of VBSP now meets the learning needs

and acli vities necessary for student or not? According to our survey through questionnaires and dimly reality of the situation with rising prices as at present it is not enough capital

Fhe loan amount adjustment has been made several times, from 300.000 VND/month up

1.1.1 VND/month, according to current prices and our survey, the amount of lending needs

to be continued increase; the government also has one adjustment loan of beneficiaries which are subject student whom family is extra ordinarily difficult to get loans in just one year, this means less restrictions on phenomenOn, but in fact is not enough capital to meet loan

tJv er survey 150 student studying at the University, 150 families have children attending

uni ci sit; col l egc and information on public school fees, non-public in 2011 by professional

•c li‹•‹› l s ac i ‹›ss the c‹›n n iry For the cost of a student attending professional schools now average c‹›s i r.m gcd front 2.5011,000 to I ,500.000 VND specific chart analysis investigation student and lu³ u ›cliolds as follows:

18

Chart 7 Learning co,st ofstu‹lent - student s urvey)

(Chart 8 Learning cost ofstudent — household survey)

Over two charts on survey data of student and households with children in school can a.sscss inc degree of similari t v of survey data between two objects Study expenses for tuition no

lc s› i lrin I )fl0,0()0 of 2.000,000 VND and has for the low part, these costs include the purchase

on l×›o ks furniture, food, travel money, cost for minimum living; other large proportion is still cc»st -f rom 2,000,000 VND I ,000,000, which can identify the average cost for one student from

I , 0t)0,000 to 2,000,000 VND, if plus the tuition the current 201 1 regulations, the cost for one

st u‹Ien t range from 1,500,000-2,500,000 VND

Base on the pooled data on the lending and capital requirements currently which VBSP under v ay and survey data, we confirmed that the loan amounts are now only partially meet the cc›si ‹›1 learnlng, therefore the demand for capital tor student still large not to mention the animal inflation rate To meet the minimum costs for student loan in the future continue to adjust

UJ.is Ci1 [ill inc mase accordingly

2/ Status of current m‹›hili za tion capital

2 I / the m‹›bi l ization ct capital tor lending to student also be limited in scope: VBSP activity lepcncls heavily ‹›n subsidies from the state budget, so VBSP mobilizing resources are limited in size ind structure, and capital raising in the passive This is shown in the following aspects:

- In principle mobilized: VBSP only to mobilize followinQ IO the market interest rate

«ft ci the use ot all funds without interest, low interest rates capital ; planning the annual iu‹›bi li zed capital of VBSP must be approved by the Ministry of Finance;

- Interest rates: Most are prescribed by the Ministry of Finance (frame interest rate) or nurse be approved by document of the Finance Ministry

- Fire scale mobilization: The subsiciizcd ii‘itcrest nute difference is determined on the basis of ion u‹'s al‹•n ¿ inc c apit:it (including capital without iT.terest) with ari average Quietest i’atc so: with iLc •u hsi‹1ies predefined VBSP can not be mobilized more than the corresponding provision of snbsi‹lies, even in some cases VBSP eligible to mobilize more So in this case caused waste of VBSP capacity and not taking advantage of temporarily idle funds in the economy

2.2 / Give right on mobilization targets for branches focus on the basic criteria: the size of each type of capital, not specified cost targets mobilized capital This trend to: the branch to complete the assigned targets will mobilize the highest interest rate possible, leading to higher input cost If scale subsidies identified then mobilized capital in market interest rates will

decrease

2.3 / The diversity of mobilized capital is not high: Compared to the capital of a regular bank, c en compared to other types of VBSP capital stipulated in the charter capital structure is not possible smi‹1cii h i› ersi ix such as the current new capital for loans student focused mainly budget

t‹n‹l central bank lending, bonowin b State Treasury) bond issue, raising the personal organizer on the

market very small rate VBSP unrealized demand deposits, loans have not made social insurance, and distribution of tern bonds, solicit funding in the country and abroad

2.4 / Source directly mobilized VBSP is very limited and was not abundant, was unattractive: raising capital directly VBSP including deposits of organizations and individuals, sieving (the period from non-term to a term of 12 months, over 12 months) By the end of 201 l , VBSP residential deposits and saving the poor 240 billion (0,7% of capital for loans

S FI IDENT) which are mostly personal savings, no deposit payment Forms of mobilization in the form ot traditional, monotonous Form of interest savings mobilization ladder applies only at the t rmisa ct ion not applied in other branches, plus applicable interest payment only after,

» i il i‹› iii m› t’‹› rm ct proni‹i1i ‹›n comes

2.5 5 M ‹›hil mation taking i olun tar deposit with no interest, entrusted resources, capital resources, from organizations and individuals to lend student not be done: with the tradition to help the poor and policy beneficiaries This is a precious tradition of the nation, if that

inspire,

20

en list, they may raise substantial funds from organizations individuals in the form of Voluntary

I rust I.can, non-interest deposits, non-interest capital, present Furthermore, if using forms of

c r‹ di t are m‹›re effective than other forms of gratuitous, thereby better promote the impact of

ca JJ lla l IO the poor and other social policy beneficiaries

.1/ Tue limitations in the raising capital

3 l / V BSI' lending policies with preferential interest rates lower than market interest

i uc i i ‹›t c n‹›tig1i 1‹› com er the operating costs of the bank VBSP to receive annual subsidies

‹i in i n i ×irat i› c c‹›st s and interest rate differences from the state budget Meanwhile, plan of su1›sidized trem the state budget each year have been identified before but not entirely based on

«c‹ ual demand for leans of beneficiaries that X' BSP service

3 2 / The in.obi!ization interest rates follow maikc• t pi’ir›ciples: VBSP only mobilize when

u scd maximum capital with lOw interest or without interest, on the other hand the mobilization f‹›1low plan on the basis of subsidized from the state budget, so the branch is not done raising the amount of announced plan

3.3 / Mobilization strategy in particular - a funding strategy for the period of short and

me‹1i n m term is not specific and detailed Funding strategy will specifically facilitate the

m ‹›1› i I i z at i ‹›n ‹›f VBSP to: establish schedules, capital as well as focus specific measures to

3.4 / Although network performance funding to the district, but the VBSP just formed, so

deficit and weak in many fields: the seat (rent, borrow, receive, so there was no convenient

place for transactions, not created trust the sender), lack of equipment (the branch of the minimum conditions for the operation of the bank)

3.5 / Banking technology are just at the traditional format; implementation of payments, internal transfers, unrealized modernized Banking Information such as other banks

3.6 / Not applicable financial mechanism of the mobilization, which may encourage

a1‘fi l iates to mobilize cheap capital

3.7 / For access to capital from foreign institutions (especially the financial institutions):

Min ‹› I the main reasons is the dlffert2 RCt2 Of Opinion as interest rates VBSP subsidized interest

I‘il( kS: $ ilC ct’ a common strategy of VBSP activities as well as funding strategies involving

credit i‹›reign no comprehensive assessment of raising capital and other forms of

C il½Si1ication credit funding foreign elements to take appropriate measure5; promotional act i ities, VBSP not widely introduced

2 l

C II APTF.R IV SOC I AU ZATION CAPITAL SOURCES FGR CREDIT PROGRAM OF

LEN Hl N €i TG STUDENT

i / i-.i i’i:t r÷ oF RA ISINCi CAPITAL SOURCES FOR THE CREDIT PROGRAM

II E LI.N HIX G TO STUDENT

Creation of additional capital sources will make more loans to more students While a

l turned state budget, the capital mobilized from all sectors of society is urgently needed,

c o rrcsponding to cach student be going to college, college or vocatlonal training is no small

‹ xpense for social Socializing capital to increase lending in line with demand, the number of

s tridents meet increasingly large, revolving capital to offset significant impact to society to

c ducat ion and especially the w‘ater affect the success of a pro bram fOf S FUDENT credit for each goal as follows:

I / Contribution to increase the budget of universities and colleges

l’lie pu bl ie schools are facl nb ²unding shortages, due to: State funding of schools is not

s at tic rent to maintain the level and quality of enrollment in the context of increasing costs; trend

c u t reduce public sector budget significantly reduces funding for education in general and higher e‹d uc‘«tion colleges in particular, forced the school to go looking for other funding sources to out their duties; Government priority in basic education (primary education) rather than col le(;e education leading to a reallocation of state funds from higher education level, college

Ie vet education to the other

Fhis lead to the public universities will have to recover more costs to compensate for their activities through the search for alternative state budget revenues We could see that it was

th c immediate revenue from student who is receiving educational products through increased

ra ie ‹› l pay (tuition) to be able to cover study costs; student may have access to capital from

ha ;jk s Jhi t Hank res‹i urces are not available, so the extent a State shall support the creation of

CII i lil$ il Tl d iHleresi support to banks can lend and student able to borrow for payment expenses

l e•irning costs, reduced debt burden, income expectations have been higher in the higher

cd ucated

2/ Creating conditions for expanding higher education system and colleges

State has IO inlet the growing needs of society through higher education admissions

po I i cies However, in fact that the number of student rising too fast and tight budget are not suifficient to meet this increase, if the State continues giving subsidy burden on public spending Fo solve this problem should: Additional funding by increasing fees or system

de we lopiuc-iii ‹›f private higher education Both ways are needed financing through a student

ci‘c'‹l it s › stent t‹› address the burden of I u i iiOU fees and subsidies from state budgel

3/ Social Securits (e‹juality’/access opportunities for the poor)

22

The p‹›or and the policy beneficiaries are the objects when lack of funding studying in c‹›llege, faced with a variety of CoSts: tuition, living expenses, travel expenses Here are the

f ›cneficia ries must be concerned by the State, with the preferential policies Most of them live in

‹li l’l i cult areas on all the country as the vulnerable groups in society, so the need to create

‹›pp‹›n unities for them to access higher education system than to change the perception, change

I h c way of production, creating relatively equal between regions and between the parts, strata of +‹›c iety Focus here is the preferential capital, have clear policies, including subsidies on interest

L il /L ra ce pcri‹›‹J repayment period, repayment ability

I lie lending to student di t’ficu l ties with prelérential conditions for investment will be

i ‘ 1‹ i ‹ 1‹i‹_ t sc 1 I n stea‹i o1 subsidizing the schoc›l to create a training environment, the students

» nti are n‹›i ‹11 lti C H ll will also enjoy the benefits that cause waste in investment, the government

- reat es opportunities for the poor tO access funding to university education and equality with other people, at least on cost to pay for their studies

4/ To meet the needs of human resources in the future

As capital increases, the CPLS can interested in beneficiaries outside of the current

p olicy There may be loan program for those types of training high-quality, high fees, such as technology, high technology, microprocessors the important social areas such as doctors, teach ers serving in remote areas or for priority sectors such as medical students

5/ Student supporting

C u rrcn tl y loan amount only guarantees fOr tuition and partial support for study expenses and act i v ities of student This means the family still has an important support to ensure their children can team normally Even, at the minimum fee (both difficult and normal) are also faced with significant financial burden, especially with the student go away from home

Increased capital to increase lending loans and increase the number of loans with

pr eiérential conditions can reduce the financial pressure that the main effect, significant to the learning of student is also reduce the negative factors to long-term goal is the quality of human

re.sources

In principle, measures to reduce the burden of credit for disadvantage students may also

up pl › to the student not difticul t, but the conditions may not be preferential or in a reasonable

I ‹› ‹lilFl l\ : I n crc•ase i tic coinin“i tmenl o I student (on study and repayment), and take

$i! lill lC l il i Ild D Qlld OH CC for student Because they are not difficult and get too much benefit from

tin i entry education would not be driven or otherwise committed to learn because have not to

pa y school fees ; The CPLS will make the improving of college tuition affordable; final repia v ment due to the STUDENT use their income to repay the borrowed credits

23

II / SOLUTIONS TO SOCIALIZE CAPITAL SOURCES FOR CREDIT PltIlII RAM OF LENDINCi TO STUDENT

With the Government's determination not to any student who difficult circumstances to

c n c sch ‹›‹›l because ct lacking of tuition; asks for consensus, the mime of the credit institutions

c !‘|3i i J‘‹l l i II[l N i ll ilfd C icl $ stale c‹›rp‹›rai i ons and enterprises in at I economic sectors contribute to

‹ i ‹'tic i c ‹›l i i rig l ‹›an tii nds l ‹›r student beneficiaries who are disadvantaged under Decision No

5 7 ?0fl 7/QD-TTg dated 27/9/2007 of the Prime Minister, "socialization capital source for Credit Program of Lending to Student" is a right policy ot’ the Ciovemment, reduces the burden

on the state budget for the program, just have enough capital to implement the program, and ask

I he whole of societv torn hand.s with government to promote the education cf the coun t ry 4I ith

I he support and contributions of economic elements in society will help many stud•.nt of poor households, househOlds hav•_ difficulties to get loans to continue to study, contributing to the cie el opment education and training, improving the quality of human resources, meeting the r'equi remen ts of industrialization, modernization and development of knowledge economy

Through the survey results from the questionnaire for staff in the sector related to lending

[Utl IC U !JJtJ$l • C f C SU Ori l VG Of increased funding to provide loans for credit programs (92%

s,u J›p‹›n households) on the capital to demand the implementation of the program, we would like t‹o propose six major groups following

C"harl 9 Socialization capital sources structure survey)

The chart above demonstrates positive and believe in capital to increase lending from the giroup capital, a large proportion of the group to issue bonds, raising subsidies, and other

scaurces

The CPLS is one of the major programs and the State's key major funded by the g‹oi ernnieni, mobilized by the banking community, business community, and financial institutions major credit and entrusted by organizations and individuals inside and outside the c‹.» unl r under the motto ”the state enterprises and people doing together" Based on the

I inn ii ‹›n ‹kii i cs a n‹1 regulati‹i ns ‹› t ’V DC I' act i v ities w ith pcrt‹›rm ance tit the survey results

\ TU I' and S‹›niU O t tlC tills in the agencies On pOlicies related to CPLS

In order to socialize capital source of lending to student, we propose to focus on raising caJii t al mainly from the four channels as follows:

(1) The economic components, all the people who buy bonds issued by VBSP under guarantee of Ciovemment

(2) The credit institutions, organizations and individuals give loans to VBSP for long- term or maintain deposit balances in VBSP

(3) Encouraging organizations and individuals inside and outside the voluntary not to rci u m ›!‘ capital ccntri bution create capital for luans to student

(4 ) K _q u csi the Government at !o-a using of Social insurance Fund

Tht solution of socialization capital sources for loans specifically to raise funds

trem capital above 4 channels:

1/ Solutions to mobilize various capital sources

VBSP well as other banks will not work with a single resource mobilization The main reason is: if only to get the capital will not only meet working capital needs of banks and other masons the very high liquidity risk depends on the unique funds mobilized

Currently, VBSP performed mobilization of funds for lending to student: Mobilizing deposjts (including deposits with interest, the savings of the poor), deposits of the State of credit institutions (2%), ODA loans (IFAD II project), and lending state banks, State Treasury, issue

bii nds

l‘liii s c‹›mparcd with the VBSP mobilized capital is specified in the charter activities of

V 13SP: VBSP has not raised capital: deposit certificates and other valuable notes; loans from the Social lnsurance; ODA received by the Government, receive financial assistance from

or ganizatiOHS dfld individuals inside and outside the country

Like any other bank: lack of capital necessary to accelerate the mobilization of capital, if

th e source is unable to raise enough to expand and diversify funding sources and other sources Because the efficiency factor, the diversification of sources of mobilizatiOn factors need to be included capital costs (including interest rates, raising costs, secure payment ), meaning that VBSP should first exploitation of cheap capital mobilization has lower input costs to provide loans to CPLS

I 1/ For the mobilization of capital u ith low interest rates

\ US I' need t‹› the us ‹›n the capital with nonc interest, such as i oluntary deposit none

i ii iw est : d ‹›iia t ed capital, or low-interest sources such as none term savings, savin8s Of the poor, pay i n c- n t deposits of the customer, the ODA program, project

I o raise capital at low interest rates VBSP should focus on specific solutions:

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- VBSP needs to enlist the support of other agencies, other ministries and committees at

i h‹ central government and local government Support student beneficiaries loans need to be

$(J Ciil$ i Zéd, to he considered as a regular task of the authorities, agencies, organizations and

i n‹l ivi cl uaIs MOreover the VBSP model has Board Committee representing provincial and

‹District levels with components include: People committee, departments, branches and mass

on mi i za ti ‹›ns l3ccause this is convenicn t, VBSP should promote to take advantage of

i‹ iii J›‹›i iii i I i cl l e i un ‹1s un u se‹J capital raising supporters non -intcresl deposits of the

.i_‹’n c ice ‹›ry ani zai i ons and individuals

- To implement this goal, VBSP need to make great propaganda, dissemination, and co- ordination c•tli•r cc:n:nittees, go» ermncnt ‹departments and local organizations, specially the klinistry of Eci uca*.ion, Ministry of Labour in valids and Social Affairs launched a mobilization t‹› crc•ate sweeping regularly to attract deposits no interest or low interest loans in order to

i inJ›l ement the policy beneficiaries locally

- It is necessary to promote the mobilization of savings in the poor through the forms of starting saving and saving each month

- VBSP expands and diversifies relations and cooperation inside and abroad To be able

I!! ilCC fi ss and promote the campaign, enlist the aid of foreign incentives, one of tht2 l lT1 Ortdflt

c‹›ndi iions is promolion VBSP image, expansion and diversification of foreign relations, rule mat tonal cooperation

- VBSP implements programs and projects currently using foreign capital VBSP although the new bank is established and in operation but there is an advantage: legacy programs and projects of those with previous loans (by AgriBank) This suggests that if VBSP continued successful execution of projects already, will create favorable conditions to confirm VBSP cap.icity and their experience, thereby raising the conditions of new foreign capital to supplement capital for loans to student

- To build the programs and projects to lend to student campaign to attract funding As the Grinding (loan and consignment), thé lnitlative in drawing up the list should be supported and

‹l‹'i.r led h› the project the project loan is essential so that promotion advocacy, referrals and i× g‹ mat i ‹›n s on the admission of foreign capital However, the current initiative of VBSP in this ii‹-ie is not high, further more there are not evaluations, overall customer research, the construction area to area, the proposed schemes and transport plans the foreign loans

- Ensure the requirements of some basic financial ratios required by the donor Usually the nl crnational financial institutions such as WB, ADB will require credit institutions when their loans must meet certain basic criteria For the WB to be able to get loans, the credit mel t:ui ion should meet some basic criteria (Solvency: Liquidity; profitability and efficiency, qual ij ct management staff)

26

1.2 / For the capital mobilization in market interest rates

' 41‹›hi 1 i z:ii i ‹›n th r‹›ugh the issuance ct fronds promissOrJ notcs VBSP

I i i tier than other i pcs c› t deposits is due to capital has advantabes such as: VBSP can mobilize

il l •ltpe amount of capital, in short time (release time usually not exceeding 02 months); VBSP can use existing broad network of mobilized to perform in order to reduce the cost of raising; time is longer use capital (as mobilization time), with high stability

- Some necessary conditions for VBSP to make this fund raising: Preparat iOR thOrough research: mobilization scale, mobilization forms: promissory notes or bonds, or both, the niob i1iza'.ion time, mole of c1i sti‘ibution; making propaganda, advertising introducing

lue irin s'º' F•rpos• t€l the public issue broadly; Create thc abillty tO convert debentures, VBSP

tli r‹i ugh: anonymous de1›l issuance, endorsement transfer, mortgage, Make sure that the norm ical interest rate is not lower than the bank bills and other credit institutiOns; ensure positive

!’ il i fl( fiFfi s/ rates after inflation except fOr the owner

* Promote capital mobilized savings deposits and population:

- As the limited analysis of the mobilization of VBSP: the mobilization and scale are preserve mobilization is limited by subsidies plan from the annual state budget, although in fact

the network VBSP grid is fully able to mobilize more But much remains VBSP to be done to

mat.e good on this fund raising as the other banks, but VBSP also has strengths certain: there are

eXJpn sive networks of branches at district, CTP, LSG, the State shall ensure solvency

- Conditions for performance of this mobilization

+ VBSP must identify and accept the market competition in the field of mobilization capital sources On that basis, for application forms, measures, how to mobllize effectively

I ac i ua I hasis is: VBSP can not raise capital on the market if inferior to other credit institutions in

.irc a • such as interest rates method of raising capacity and reputation of the bank (offices,

»ehi c1cs bank technology,) So the solution include: VBSP should continue to complete the network office, staff, equipment and banking technology meet the requirements of raising

capital in the economy market, competition from other credit institutions

+ VBSP need to use mechanism pays the branches by funding and raises capital in inurFe t interest rate Through this mechanism of stimulation dynamics, certain autonomy of each 1›r:inch each bank officials in the work of raising capital

+ VBSP should propose to the Government: The government should grant compensation

‹›n tl e basis of actual mobilization to meet the demand for loans of objects o1 social policy

i n ste.tel ‹›t s uhsidi zcd plan current I

* l l ‹›rr‹›v ing s‹ic i‹i l in sur.nice:

27

- According to Decision No 02/2003/QD-TTg dated 02/01 /2006 of the Prime Minister

;ir‹›niu1gating the Regulation on financial management for the Vietnam Social Insurance (SI) ind Circular No 49 / 2003/TT/BTC dated 16/5/2006 ‹›f the Ministry of Finance guiding the

t i crucial management regulations contain provisions for social insurance: to temporarily idle

t finds, social insurance can take measures to preserve growth and social insurance funds as

t o l lows I in order of priority in practice):

÷ Buy bonds, bills, promissory notes, bonds of the State Treasury and the banks;

I n vcs t in s‹›n» e projects by t hc Prime Minister's regulations;

\1a kc l‹›a ii s i‹› nate hudyei, the Development Assistance Fund, state commercial banks,

* Loans from other credit institutions in countries:

VBSP loans other credit institutions in the country is also a contributing solution to

p remote the mobilization of VBSP As required deposits of 2% from these banks to lower

interest rates, higher stability The loans from other credit institutions will encounter difficulties: these organizations are not always redundant capital, especially when the relation of supply smaller than demand on the market for capital, further credit institutions belong to the State

ii ncliiding shares and the State has held the dominant percentage) had to perform the obligation

is mandatory to send 2% of outstanding deposits in VND into VBSP, that the loan is based on the agreement itself voluntary, if there should only be temporary: the loan term will mostly sJ‘i‹ term narrow scales, the interest rate as market interest rates plus mobilization costs of

Hub sC tI l‘ ilfll Zill lORS

In order to get loans from credit institutions in the country, VBSP needs to consider: The

demand for long-term, medium-tern or short term capital sources If demand is mainly student

le nding (medium and long term loans), the credit from these institution is not the optimal

soliltion; The loans of credit institutions that have significance to cover demand temporary capital; Interest rates may be higher because these organizatiOns need to ensure cover the cost of capital mobilization profit

2/ Group of solution implemented various forms of capital mobilization

As recommendations analyzed above, capital sources that VBSP focus to mobilize is

ca pi ta I ith mark c•t interest rate because there is only this fund can be fully mobilized to meet

i li c ›‹›i i‘ » ink needs ‹›f’ the ob|ec i STUDENT

l In in obi l izat ion ot capital with market interest rate requires VBSP must meet the other

i e‹q ulrc nicnts o1 maf kets such as commercial banks, this means VBSP must accept fair

co mpeti iion as other commercial banks In other words: VBSP nOt inferior to the other banks in i’a r si ng capital

28

C’ompared with current practice the form of’ raising capital V H SP very monotonous, not

pl c-n ti l n l and less attractive, such as: focusing only on savings deposits mobilized from people,

‹Ie p‹›s its negligible In the savings mobilization using tradition forms

I r‹›in th l$ real try In ‹irder to prom c›it? the mobilization of capital source to meet student

›.› ii « c pi‘‹›p‹›sc s‹›m e measures, as follow:

l he lirsi: VB$ P apply diverse forms o1 mobilization deposits of individuals and

‹organizations such as: deposits, deposits with interest like saving accounts, perform payment services, bank tiinds: combined with the organization to perform paid services, payment of service activities such as paying fee of electricity, telephone, water, or services: payment

card×, AT 4 cards, charge fees student, life insurance pieini uins of individuals, payments to ihe

obiect to export l aho

The second: VBSP apply diverse forms of savings deposit.s from people: besides the traditional form of savings, savings ladder, contributing savings, need to make more foreign currency savings and encourage forms comes as interest paid in advance next following interest

p n iii en t form Should soon replicate to form branches to mobilize the entire system

I hirdl y VBSP diverse forms of mobilization term bonds, bank bonds which: makes it possible to convert to bank bills, diverse forms on: original maturity, maturity interest, interest

pai‹J in advance or paid interests after, issuing foreign currency deposits in addition to mobilize local currency

* Conditions to perform various forms of mobilization

(1) Completion of physical facilities, working facilities, equipment and techniques

Currently, not meet certain conditions of banking activities Meanwhile, the highest requirements for customer are safety, transaction convenient, so the bank should have equipment for the loyalty of customers;

(2) 4 raining and retraining of banking operations to the staff establish Center Training of

V I3S P and have human resource strategy;

.› l Implementing internal payment, set up a Payment Center, participate in inter-bank payment: Fhis is a prerequisite to mobilizing payment deposit

(4) TO t2Tform foreign exchange operations, which focus on mobilization, foreign currency loans, make international payments, set up the system of correspondent banks abroad, the establishment of the Service Banking Center

(5) Application of new technologies in the field of modern information technology for illi F in ilC il Vlties Im lementation of VBSP information technology modernizatloll

(I›) Thoroughly understand ideological orientation competition ot raising capital with tunnel interest rate in the market economy, avoid passive idéOlO y based on grants from the

C’ H APTF.It V: CONCL LJSI GNS

Willi the I c›vernment ' s determination not let any student who has difficult circumstances i‹› dropout for lack of lUitiOn; ask for consensus, the force of the credit institutions, corporations, financial State corporations and enterprises in all economic sectors contribute to create revolving

capital sources for student beneficiaries are disadvantaged by Decision No 157/2007/QD-TTg

‹lated 27/9/2007 of the Prime Minister, "socialization capital source for credit program to

student” is a right policy of the Government, not only reduces the burden of the state budget but als‹› create enough capital te implement of this program, and appeal to the whole society for

j‹›i n ing forces with government to promote the education of the country

W' t h the support alld COnlribut ons of economic elerr‹en ts › n sucieiy wifi help many

vin‹ me ‹• I’ p‹›‹³ r hoti seh •.› l•d s disad' antage households to get loans to cOat inue studying

‹‹›i iii h uti ng to the development education and training, improving the quality of human resources, meeting the requirements of industrialization, modernization and development of kn‹›wledge economy

Within the scope of our research, with learned knowledge and understanding in this field

we have been analyzed, evaluated the situation, investigated and answered the research question about the credit demand for learning of student, determine the feasibility of capital socialization, the support about socialization capital for program of people and the policy maker Specifically, the loan amount can not currently meet the cost of learning for students, this amount should be

riliSéC$; tht? OSSibl e on theoretical and practical ; most interviewees were supportive of the

s‹›c ia l i zation of this fund: There fore, we would like to propose some feasible solutions to

i m p l eiii en i s‹›cial ized capital source for CPLS

* The limitations of the thesis

- The thesis has not overall evaluated all the capital credit for student outside Decision

No 175 of government (commercial loans for study cost)

- The thesis has not mentioned about solutions in order to attract more student in sOcial len‹J ing for their study cost

- The thesis has not offered the capital management solutions to achieve the objectives of

C PI S

* Suggestions for future research

When capital sources meet loan demands student and raise much more capital, it will

C‘[jfkil(? Alex requirements, w hich are:

( i i I l‹» d‹› all st u ‹J en1s can access more credit from thls program?

i 2 i I l‹›w docs program must he managed in order to get both promoting eftéct ive credit

i n i p lei n cn t at lon and a maximum objective of social equality?

30

Aftcr capital source meets current large demand for loans it will generate new rc•‹ju irements, which is how student can reach more with this credit program how effective does the p r‹›gra m must be managed in order to prOmote the credit effect and making up the social g‹›.i ts ‹›t’ equality II’ have chance, we would like to continue studying in a higher research

I Under the guidance of supervisors in Vietnam and Swedish, and also participation of the

g i ‹›up 1‹›r c ›mments critical essays We are confident that the solation of capital socialization for

! Al ie i‘‹› I con‹› mi c tcx tb‹›‹i ks - Nguyen Dat Fhang (211115) — I he Science and

I c c li i i‹›l‹›¿ v 1’uh1 i s1i ing, Hanoi

? Central I3ank Textbook - 2005 — Statistics Publishing

3 Central Bank - The ROle and the Professional - 2010 - Duong Huu Hanh — The Labour I'u1›1ishing

4 Theory of Finance - Currency - 2010 - Dr Le Thi Man- The Social Labour Publishing

5 Malkhotra N (2006) Marketing research An Applied Approach Pearson Int

6 Research method in bussiness - Saunders M.Lewis P.Thomhill A -2010— Finance

Puhl ishing

7 Decree No 78/2002/ND-CP of October 4, 20112 by the Government on c:edit for the po‹›r and other policy beneficiaries; Decision No 13l /2002 QD-TTg 04/I 0.'2002 Decision of the Prime Minister on the establishment of Viet Nam Bank for Social Policies; Decision

N ‹› 1 5 7 2(1 )7 ³QD-TTg ct the Prime Minisicr dated 27/09/2007 on credit for students

8 1'olicy options for student loan schemes: lessons from five Asian case studies -

II N F 'SCO Bangkok/ ll EP, 2004 - Adrian Ziderman

9 Higher Education Finance and Cost - Sharing in Korea (Updated April 5, 2010)

10 The report analyzes the current state of financial management college - 2010 -

Research Center of training and management skills development — Ministry of Education and

Ti aining

1 1 The report of VBSP, Ministry of Education and Training, Ministry of Labour Invalids and Social Affairs

12 Study cost of student at website: http:1ltuoitre.vn/Tuyensinh/Tuyen-

s i n h 4297 I 8/Toan -canh- hoc- phi -cac-truon u- DH%C2%A0 CD- nam-201 1.html and

li up: v ›v w tlianhnicn com vn/pages/201 10902/chi -phi -cua -mot-sinh-vien -hoc-dat -hoc aspx

32

APPENDIX

1 RESULT OF QUESTIONNAIRE SURVEY FOR STUDENT

- MOhthly, students have been paid 375,000VND for tuition in the public universities ind ')20,000VND for tuition in the non-public universities, in average

- Minimum expenditure (except tuition) is about from I ,500,000VND to 2,000,000

VNi³ per month