3rd Mekong Forum on Water, Food & Energy. Presentation from Session 3 & 5: Extending the benefits of hydropower: Clever suggestion or realistic goal?

1. DIRECT vs INDIRECT PES:
Could Micro-credit be an option?
Le Ngoc Lan, Florence Milan, Chu Thai Hoanh, Tran Duc Toan, Nguyen Duy Phuong

2. Introduction
• Objective:
- To find out if microcredit could be an option to use
PES more effectively.
• Study site:
- Da Bac district, Hoa Binh province
- 4 communes in Son La (Chieng Yen, Chieng Ngan,
Long Phieng, Phieng Khoai) as comparative case
• Research methods:
- Questionnaire, focus group discussion, official
interview

3. 1. Problem of direct disbursement (1)
Forest owners which are
individual houshold
received very small
amount of money which
contribute absolute
nothing to forest
management activities.
Minimum amount of money that
household received was 2,000
VND (1 cent)
Contribution of PES
Frequency
Valid None
Less
Total
Percent
Valid
Percent
Cumulative
Percent
9
11.0
11.0
11.0
52
63.4
63.4
74.4
21
25.6
25.6
100.0
82
100.0
100.0

4. 1. Problem of direct disbursement (2)
Column1
Son La province
Chieng Co
commune
- Chieng Yen
village
- Hom village
Chieng Ngan
commune
- Pung Luong
village
Long Phieng
commune
- Mo Tuoi Village
Phieng Khoai
commune
- Ta En village
Total forest
area under
payment
(ha)
633786
Total money
from PES
Community
(,000 VND)
forest area (ha)
100000
2185.86
23357
123277
1327.23
Total forest
individual
owners
Note
480889.2
106.17
560.35
Total PES for
community
(,000VND)
Total PES for
individual
owners (,000
VND)
291991
392.28
86302
3614.18
49089
4186.54
579.59
915462
127509
23357
82000.7
0
119
0
41276.3
community
keep all
money from
PES for
community
and for
individual
household
795125
223.13
106.17
441
86302
41650
208.28
11
22
7439
63261
77
64248

5. 1. Problem of direct disbursement
(3)
• Unclear land allocation from the past
caused conflict during payment
Eg: some households claimed that they are the
real owner of this forest => official did not
know to whom they should pay.

6. 2. Why could micro-credit be an
option?
(1)
• Two formal organization provide
microfinancial services:
- Vietnam bank for Social Policies (VBSP)
- Vietnam bank for Agricultural and Rural
Development (VBARD)

7. 2. Why could micro-credit be an option?
Households hardly access to VBARD
loans due to:
- Distance from village to district transaction
office => Transportation cost.
- Collateral examination of bank offical usually
takes from 2 – 6 months.
(2)

8. 2. Why could micro-credit be an
option? (3)

9. 2. Why could micro-credit be an
option? (4)
• No difficulty in access to VBSP loans.
• However, not all of them were granted
100% amount of loan due to fluctuation of
VBSP loans disbursement to commune
every year.
=> Increase of demand for loans.

10. 2. Why could micro-credit be an
option? (5)
• Community Development Fund:
- 4/5 villages used the fund to pay for forest
protection group and invest into
infrastructure such as: road, cultural house,etc
- Mo Tuoi village, used the rest to lend to
villagers.

11. 2. Why could micro-credit be an
option? (6)
“Since you will receive this fund continuously
every year, when road and other infrastructures
are already built, what will you use this fund
for?”
“Lending to villagers for production” is the
most answered.

12. 3. Conditional vs Unconditional
lending (1)
• To those who participate in forest
management activities, between these two
types of loans, what would you prefer?
1. Conditional: You can access to loan with very low interest
rate but you have to use the loan for forest production.
2. Unconditional: You can access to loan with higher interest
rate than 1st case but the rate is still lower than bank. You
can use loan for different purpose.

13. 3. Conditional vs Unconditional
lending (2)
Conditional & Unconditional lending
Frequency Percent
Vali d
Conditional
Unconditional
Ko vay
Total
Valid
Percent
Cumulativ
e Percent
15
18.3
18.3
18.3
20
24.4
24.4
42.7
43
52.4
52.4
95.1
2
2.4
2.4
100.0
82
100.0
100.0

14. 4. Where to borrow?
• Among these three options, where would
you prefer to borrow from?

15. THANK YOU FOR YOUR
ATTENTION!!!