Advancing strategies in the financial realm of Vietnam aiming to spur growth

Vietnam's financial leasing sector is undergoing significant changes as it seeks to address key challenges and embrace digital transformation. The sector, which often operates like banks but lacks comprehensive product packages, faces hurdles in the legal framework, capital raising, product offerings, and digital transformation.

The legal framework currently presents an insufficiently open and stable environment, hindering growth and adaptability to modern demands. The government and State Bank of Vietnam acknowledge the need for a more flexible legal environment, particularly one that can accommodate digital and hybrid assets. Amendments to land laws, such as enabling lump-sum payment of land rental for the entire lease term, are underway to improve project bankability and long-term financial planning for leasing-related projects [2][3].

Capital raising is another significant challenge. Financial leasing development is often constrained by limited funding channels, with SMEs finding it difficult to access traditional banking sources. Policies are being proposed to diversify funding sources beyond banks, including expanding tax incentives, creating more open capital markets, and mobilizing international green finance [3][4].

Product offerings need to evolve beyond traditional asset leasing to include digital assets and hybrid products that combine physical assets with software and technology solutions. This evolution demands more flexible legal and operational approaches. Products aligned with sustainability and ESG standards are also increasingly demanded, requiring leasing services that support enterprise upgrades in technology and green growth [2][4].

Digital transformation is crucial for Vietnam's financial leasing sector, particularly for SMEs facing credit access challenges. Digital platforms for leasing management, carbon tracking, and green technology adoption are critical. Experts highlight that green growth and digital transformation are intertwined, reshaping economic models and requiring simultaneous advancement in both technological and financial leasing capabilities [2][4].

General Secretary Phạm Xuân Hòe of the Financial Leasing Association has expressed concerns about limitations in data connection and updates between State management agencies, causing businesses to waste time and money. He gave an example of vehicle badge cancellations, where vehicles must wait and cannot operate due to lack of documents, resulting in revenue loss [6].

Currently, there are approximately 15,000 lease contracts from the eight actively operating companies, with a total outstanding lease debt of approximately VNĐ47 trillion [7]. Hòe believes that with a clear legal corridor and modern digital infrastructure, financial leasing will have the opportunity to become an important channel of medium- and long-term capital, supporting businesses in technological innovation and improving competitiveness [8].

However, financial leasing companies in Vietnam are subject to many regulations similar to those applied to commercial banks, and are only allowed to lend to or receive deposits from credit institutions with a maximum term of one year. They are not permitted to issue bonds to the public [9].

The modest development of financial leasing in Vietnam is due to an inconsistent and unsuitable legal framework. The association recommends that the Government establish mechanisms to hold ministries, branches, and localities accountable for resolving recommendations. Hòe proposes simplifying licensing conditions to encourage the formation of many financial leasing companies and general financial companies [10]. He also expects authorities to develop and cleanse the national digital database, creating a foundation for the digital economy [11].

The Politburo's Resolution 68 provides opportunities for lending institutions, including financial leasing companies that do not accept deposits [12]. Hòe is optimistic about these opportunities and expects management authorities to upgrade administrative procedure processing software to ensure data connectivity between ministries and branches and shorten processing times [13]. He suggests developing a Law on Financial Leasing or a Law on Non-Deposit Lending Institutions, including a dedicated chapter for financial leasing [14].

Despite these challenges, Vietnam's financial leasing sector is poised for growth, with the potential to become an important source of medium- and long-term capital for businesses. By addressing the key challenges and implementing proposed solutions, the sector can support businesses in technological innovation and improve competitiveness.

To improve project bankability and long-term financial planning for leasing-related projects, amendments to land laws, such as enabling lump-sum payment of land rental for the entire lease term, are underway.
Policies are being proposed to diversify funding sources beyond banks for financial leasing, including expanding tax incentives, creating more open capital markets, and mobilizing international green finance.
Product offerings in the financial leasing sector need to evolve to include digital assets and hybrid products that combine physical assets with software and technology solutions, aligning with sustainability and ESG standards.
Experts emphasize the importance of digital transformation, particularly for SMEs facing credit access challenges, with digital platforms for leasing management, carbon tracking, and green technology adoption being crucial.
The association recommends that the Government establish mechanisms to hold ministries, branches, and localities accountable for resolving recommendations, simplify licensing conditions, develop a Law on Financial Leasing or a Law on Non-Deposit Lending Institutions, and upgrade administrative procedure processing software for data connectivity and shorter processing times.