Specific credit policy needed for Mekong Delta growth

There is a concern that private investment capital in the Mekong Delta has decreased from 14.9 per cent of the country’s total, to only 12.4 per cent in the last 10 years. How can we improve this?

If calculated on a per capita basis, the investment of the Mekong Delta region ranks third in official development assistance, fourth in public investment, fifth in foreign direct investment, and sixth in private investment. Those last two are the most important pillars and growth drivers of the region.

This is the issue that we, as the creator of the Mekong Delta Annual Economic Report, have raised as a development bottleneck and the reason for the downward trend.

The most important thing is to control that downward trend. The critical point that needs to be improved is public investment. Public investment in the Mekong Delta only accounts for about 12 per cent of the total state investment, a very low rate for a region that contributes significantly to exports and agricultural production, as well as ensuring food security for the whole country.

Accordingly, there needs to be a more appropriate investment ratio, commensurate with the potential, role, position and contribution of the region to the whole country.

It is necessary to identify priority investment areas that bring high spillover effects, such as transport infrastructure, telecommunications infrastructure, and digital transformation.

We must also prioritise specific areas of the Mekong Delta, such as high-tech agriculture, crop varieties, and livestock breeds. These will help the Mekong Delta diversify its economic activities.

What else can be done to move in the right direction in terms of authorities and businesses?

The most important thing for local authorities is to improve the business environment, boost access to credit and land, cut legal compliance costs, and reduce administrative barriers. But one important thing that is rarely mentioned, which is very specific to the Mekong Delta, is credit.

Credit policy here must also be different from credit in other regions. Because agricultural production has its own cycle, its own risks and its own characteristics.

Accordingly, there is a need for credit products as well as agricultural insurance that are specific to the Mekong Delta. To achieve this, close coordination between the state and financial, banking and credit institutions is needed to design a suitable product.

The role of enterprises and business associations is also vital. Enterprises must be confident that in the next 5-10 years, no one can replace the private sector, and it will become the most important growth engine of the Mekong Delta. Only when we mobilise that creativity, can we create a startup ecosystem and an attractive, undisturbed business environment.

We must make individual businesses that account for 43 per cent of the Mekong Delta’s economy become enterprises that truly contribute to the economy, thereby increasing their scale, increasing productivity and connecting with the domestic and international economy.

Over 40 per cent of the private sector in the delta comprises individual business households. Meanwhile, each enterprise has only an average of 7.5 employees, a tiny scale. How can this be built on further?

In 2024, the Mekong Delta had the highest business growth rate in the country, reaching 5 per cent. However, an average size of only 7.5 employees per enterprise, which is tiny, showed that it has only increased in quantity but not quality. We must have strategies to increase the scale and productivity of businesses, and apply sci-tech as well as digital transformation to improve day by day.

A business of that size cannot develop on its own, but must have the companionship and support of local authorities. For example, it is necessary to form digital transformation support centres to provide consulting activities to help businesses, especially small- and medium-sized enterprises, that wish to engage in digital transformation and online sales.

Smaller enterprises also need to access international markets to receive the necessary support, with the support of local authorities, business associations, universities, and research institutes.

The private sector and the state need to broadly cooperate to help enterprises in the Mekong Delta upgrade and modernise their business.

At the same time, we need to connect the private sector with the local economy. This must highlight local characteristics such as ecology, green agriculture, a friendly environment, and sustainability in terms of both the economy and resources, and society.

Vietnam is leveraging supply chain financing as a game-changer to unlock capital and strengthen smaller businesses.

It must fully unleash the productive capacity and resources of the country through the private sector; mobilise all private resources for national development.