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Mobilized Capital, Outstanding Loans for GDP Growth


Table 3.13: Mobilized capital, outstanding loans to GDP growth

Unit: Percent (%)


Target

Year

2012

2013

2014

2015

2016

2017

1. GDP growth rate of Ho Chi Minh City

09.20 %

09.30 %

09.60 %

09.85 %

08.05 %

7.76 %

2. Capital growth rate

dynamic

09.20%

11.15%

14.41%

14.78%

16.60%

15.0%

3. Credit growth rate

11.97%

11.00%

09.04%

12.06%

15.6%

18.5%

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Mobilized Capital, Outstanding Loans for GDP Growth

Source: Compiled from reports of the State Bank of Ho Chi Minh City and the Ho Chi Minh City Statistics Office [35]

The above table shows that the capital mobilization and lending rate of credit institutions in the area increases annually at a rate higher than the economic growth rate. This shows that the criteria for the operation of credit institutions to serve the economic growth of the city are very effective.

* Capital mobilization situation to serve the demand for CD CCKT loans.

Mobilizing capital to serve credit investment for economic restructuring and economic development is one of the issues that the system of credit financial institutions and economic entities in the area are particularly interested in. For credit institutions in Ho Chi Minh City, effectively attracting capital sources is to solve the "input" problem, creating a favorable basis to serve the implementation of lending and investment plans.

Solving the problem of capital mobilization is different on a national and local scale. In fact, in addition to difficulties such as: negative impacts of the regional economic crisis, shortcomings in economic and financial activities of the whole country, limitations on the accumulation of local economies, difficulties also arise even in cases where the accumulation of capital of economic organizations and people is still very large, especially in the rural agricultural sector, those who have capital do not invest in production and business and do not deposit in banks for many different reasons. However, capital mobilization of credit institutions in Ho Chi Minh City in recent years has still achieved many significant results. On the basis of capital mobilization forms that are always improved and diversified to suit each situation and each period, it has met the requirements of expanding credit activities to serve the development of the economy in general and CD CCKT in particular.


The reason why in recent years, local credit institutions have expanded their scale and increased their lending growth rate to meet the needs of economic restructuring and development is because credit institutions have concentrated resources and promoted the attraction of idle capital locally and outside the locality.

Table 3.14: Capital mobilization and supply of credit institutions in Ho Chi Minh City

Target


Capital mobilized


2012

2013



2016

2017

1,156,051

1,301,127

1,113,635

1,306,775

1,566,876

2,044,000

Growth rate

9.20%

11.15%

14.41%

14.78%

16.60%

15.0%

Outstanding Loans

733,867

833,645

916,497

1,042,185

1,234,816

1,746,600

Growth rate

11.97%

11%

9.04%

12.06%

15.6%

18.5%

Unit: Billion VND and percentage (%)


2014

Year


2015


Source: State Bank of Vietnam, Ho Chi Minh City Branch [33]

Through table 3.14, it shows that the capital mobilization situation of some credit institutions in recent years has been growing continuously over the years, with each year being higher than the previous year. In 2012 - 2017, the total capital of these institutions has increased significantly. This strong increase is most importantly reflected in the increase in capital of commercial banks.

In 2012 - 2017, credit investment serving the economic restructuring process in Ho Chi Minh City mainly depends on commercial bank branches in the area, while people's credit funds only account for a small part. Thus, credit investment for the economic restructuring process in the city is mainly invested by commercial banks as follows: mobilized capital in 2017 had a growth rate of 15.0%, outstanding loans in 2017 had a growth rate of 18.5%.

The current situation of bank credit for CD CCKT in Ho Chi Minh City is examined through the following main CCKTs:

3.3.3 Bank credit criteria for economic restructuring

The industry economic structure is a key structure in the process of economic restructuring in Vietnam in general and Ho Chi Minh City in particular. Ho Chi Minh City is expanding bank credit in the direction of


CD CCKT first needs to closely follow the content of industry CCKT transformation as the target of economic restructuring of Ho Chi Minh City.

Table 3.15: Loans for CCKT transformation by industry

Unit: Trillion VND and percentage %



Year


Total outstanding loans

Service lending

Loans for agriculture, forestry and industry

Industrial and construction loans

Outstanding debt

Proportion

Outstanding debt

Proportion

Outstanding debt

Proportion

2012

733,867

27,780

3.79%

315,269

42.96%

390,818

53.25%

2013

833,645

28,588

3.43%

343,211

41.17%

461,846

55.40%

2014

916,497

29,899

3.26%

369,073

40.27%

517,525

56.47%

2015

1,042,185

60,632

5.82%

423,439

40.63%

558,114

53.55%

2016

1,234,816

82,344

6.67%

486,517

39.40%

665,955

53.93%

2017

1,746,600

129,001

7.39%

646,099

36.99%

970.010

55.54%

Source: Report of State Bank of Vietnam, Ho Chi Minh City Branch 2012-2017 [33]

In addition to state credit sources, credit capital flows for investment in economic restructuring in Ho Chi Minh City are also implemented by credit institutions (state-owned commercial banks, joint-stock commercial banks, People's Credit Funds, and Social Policy Bank) in the area. Reality shows that this is the main capital flow, with the largest scale and the most positive impact on the economic restructuring of the city.

Chart 3.2: Lending for CCKT transformation by industry

Outstanding loans by industry

2000000.00


1500000.00


1000000.00


500000.00


0.00

1

2

Total outstanding loans

3

4

5

6

Service lending

Loans for agriculture, forestry, industry and construction

Unit: Trillion VND and percentage %










Source: Report of State Bank of Vietnam, Ho Chi Minh City Branch 2012-2017 [33]


Through graph 3.2, it can be seen that, according to the chosen strategy, the criteria for the city's economic structure are determined to be the most correct path. In fact, credit investment of credit institutions in the area has clearly grasped the spirit and implemented in accordance with this strategy.

Table 3.15 shows that, in general, credit capital of credit institutions investing in economic restructuring has increased steadily over the years. For example, in 2012, outstanding loans were 733,867 trillion VND, in 2013 it was 833,645 trillion VND, in 2014 it was 916,497 trillion VND, in 2015 it was 1,042,185 trillion VND, in 2016 it was 1,234,816 trillion VND and in 2017 it was 1,746,600 trillion VND. However, investment by industry and production sector has different levels of increase and decrease: Investment capital for the industrial and construction sectors tends to decrease in state-owned enterprises. Notably, the agricultural and industrial sectors have increased rapidly in both capital scale and ratio. In 2012, the outstanding debt of the agricultural sector was 315,269 trillion VND, by 2017 it was 646,099 trillion VND, an increase of 39.35% compared to 2012, mainly due to the implementation of Decision 67/TTg of the Prime Minister on a number of credit policies for rural agricultural development, through which households can borrow up to 10 million VND without having to mortgage assets. Next is the industrial sector, which has grown rapidly in scale and proportion, in 2012 it was 390,818 trillion VND, by 2017 it was 970,010 trillion VND, an increase of 55.54% compared to 2012, due to the city focusing on investment in industrial parks with many large projects.

The proportion of credit for industry and construction is higher than that for agriculture and trade and services, which is in line with the city's economic development policy.

3.3.4 Criteria for bank credit investment for economic restructuring

Besides paying attention to changing the investment structure to promote the transformation of industry structure according to economic structures, credit investment of credit institutions in the city is also carried out in accordance with the multi-sector economic development policy as the economic development policy that our Party has chosen.


Table 3.16: Credit capital investment for economic components of credit institutions.

Unit: Trillion VND and percentage (%)


Target

2012

2013

2014

2015

2016

2017

Total outstanding debt

733,867

833,645

916,497

1,042,185

1,234,816

1,746,600

1. Short-term loans

396,289

413,579

481,161

614,890

728,541

1048,541

State economy (%)

27.40%

35.31%

29.72%

20.59%

20.57%

21.21%

Collective and individual economy (%)

72.60%

64.69%

70.28%

79.41%

79.43%

79.11%

2. Medium and long term loans

337,578

420,066

435,336

427,295

506,275

698,275

State economy (%)

51.5%

46.17%

49.02%

42.48%

42.47%

43.72%

Collective and individual economy (%)

48.5%

53.83%

50.98%

57.52%

57.53%

51.25%

3. Medium-term ratio

46%

50.4%

47.5%

41%

41%

40%

Source: Report of State Bank of Vietnam, Ho Chi Minh City Branch 2012-2017 [33]

Through table 3.16, it can be seen that credit institutions in the area have paid special attention to increasing the scale and quality of capital investment for the process of restructuring and improving the business efficiency of state-owned enterprises, while restructuring and expanding investment for the collective and individual economy, increasing investment to encourage the development of the private and individual economy. However, for Ho Chi Minh City to promote economic restructuring, the most important thing for economic transformation is long-term capital. On the contrary, short-term capital in recent years has always been higher than medium and long-term capital, which is a limitation for Ho Chi Minh City to promote economic restructuring.

If previously, credit borrowers were mostly state-owned enterprises, now the number of customers is the collective and individual economy, which has increased significantly. The scale of credit balance of economic organizations has increased steadily over the years, besides that, there is always a change in the investment proportion according to each economic sector. The investment proportion for the state economy tends to decrease both short-term and long-term loans. In 2012, short-term state economic sector outstanding debt accounted for 27.40%, long-term 51.5% of total outstanding debt, by 2016 the outstanding debt decreased, short-term to 20.57%, long-term outstanding debt to 42.47% of total outstanding debt, in 2017 the total outstanding debt increased by 21.21%, short-term to 43.72%, long-term outstanding debt to 40% of total outstanding debt. At the same time, the collective and individual economic sector increased.

Such a change in credit scale and structure can be considered an achievement because it is consistent with the city's economic development path in the CD CCKT and consistent with the general development trend of the whole economy.


3.3.5 Credit investment criteria for industrial programs and projects

Shifting the economic structure of Ho Chi Minh City towards industrialization and modernization with the structure of industry - trade - services - agriculture, mainly based on implementing the investment portfolio of the industrial sector, thereby contributing to promoting the formation of industrial zones, clusters and traditional craft villages. Although the factor of bank credit capital is sometimes not presented separately in the projects, it always has a particularly important position because it is one of the conditions for implementation for the majority of projects.

Through table 3.16, it can be seen that investment projects have been implemented and credit institutions in the area have participated in lending capital in the recent past. Thereby, credit institutions in the area have contributed to investing in economic restructuring in the city. The HCM City Development Support Fund Branch has also focused state credit capital on investing in projects and subjects of planned economic programs. Thereby, providing us with detailed information on the number of projects and the scale of annual investment credit. Most of the capital of the Development Support Fund Branch is invested in projects. In which, investment is mainly for industrial-construction projects; Agriculture and rural areas are also focused on investment but the scale is still very limited.

3.4 SURVEY RESULTS ON FACTORS AFFECTING BANK CREDIT EXPANSION ON ECONOMIC STRUCTURAL TRANSFORMATION IN HO CHI MINH CITY

3.4.1. Research design

The study was conducted based on a combination of quantitative and qualitative methods. The author used qualitative methods and consulted experts' opinions to survey factors affecting the expansion of commercial banks with CD CCKT TP. HCM.

3.4.1.1. Preliminary research

This step uses qualitative methods, from theoretical basis, and evaluation criteria through data collected over the years 2012 - 2017, from which the author proposes to study the impact factors of bank credit expansion on economic restructuring in Ho Chi Minh City, consulting the opinions of (10) experts, the author builds a draft scale through a questionnaire. The results are discussed in groups with experts.


specializing in bank credit and economic restructuring, calibrating scales and designing main scales for official surveys.

3.4.1.2. Official research

Using quantitative methods, conducted through direct interviews with detailed questionnaires to assess the reliability and validity of the designed scale through Cronbach's Alpha coefficient, EFA exploratory factor analysis method, and at the same time verify the suitability of the research model that has been adjusted in the qualitative research part through running a multivariate linear regression model.

After obtaining the results, the author analyzes and evaluates the results, thereby giving policy implications suitable for the factors affecting bank credit on economic restructuring in Ho Chi Minh City.

The entire research process will be carried out as follows:

3.4.1.3. Research process

The research process is carried out on the basis of preliminary research and formal research is carried out as follows:


Figure 3.1: Research process


Theoretical basis, research model, model

Suggested image

Descriptive statistics, frequencies

Draft scale

Cronbach's alpha test

Test survey

EFA Factor Analysis

Adjust the scale

Correlation analysis

Main scale

Perfect scale

adjust

Survey information collection

Multiple linear regression analysis

variable

ANOVA analysis

3.4.2. Qualitative research

The purpose of the qualitative research is to develop a questionnaire and adjust the scale to suit the survey subjects who have been working and transacting with commercial banks. Based on the theoretical basis of the research model of the impact of bank credit on economic restructuring in Ho Chi Minh City, a draft scale was formed and the next steps were continued.

3.4.2.1. Group discussion and interview

Exploratory research was conducted through qualitative research methods, discussing and interviewing experts with many years of experience as experts.

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