Solutions to foster financial leasing in Vietnam

Financial leasing is a type of medium- and long-term funding that is particularly well-suited to small and medium-sized firms (SMEs), who account for 97% of all businesses in Vietnam yet face significant barriers to bank loans.

Increased access to capital

Unlike traditional forms of credit, financial leasing is a relatively successful medium- and long-term credit form that does not require collateral, allowing lessees to borrow up to 100% of the value of leased assets. As a result, financial leasing is ideal for SMEs. The latter frequently lack collateral and have limited financial capacity, limiting their ability to absorb bank loans, despite a high investment demand for equipment and technology to develop their manufacturing.

However, the scale of the financial leasing remains limited. By the end of the first quarter of 2025, the total outstanding debt of the financial leasing enterprises had reached approximately VND 40.7 trillion, which is insufficient to meet its potential and demand. The cause, according to Pham Xuan Hoe, General Secretary of the Vietnam Financial Leasing Association (VILEA), is mostly due to the appearance of bad loans, which forces lessors to set aside risk provisions, resulting in a fall in outstanding debt.

On the other side, Vietnam now has only ten financial leasing companies, eight of which are operational. In the last 15 years, no new financial leasing companies have been licensed. The development of financial leasing firms is currently under stringent regulation, with many difficult-to-access requirements, and the licensing process is not fully transparent. Meanwhile, SMEs require flexible loans to restructure manufacturing and invest in technology.

"Only when the number of lessors is large enough can we expand financial leasing outstanding, contributing to medium- and long-term funding for the economy," Mr. Hoe noted.

Policy improvement

Mr. Nguyen Thieu Son, General Director of BIDV-SuMi TRUST Financial Leasing Company (BSL), believes that Resolution 68-NQ/TW for the first time mentions the potential of leasing non-physical assets, demonstrating modern management thinking and approaching worldwide norms. In the context of a rapidly increasing digital economy, diversifying the portfolio of leased assets to include non-traditional assets such as software, copyright, data, IoT devices, and so on will create long-term development opportunities for the financial services industry. "This is a trend that is in line with the current digital transformation needs," Mr Son stated, estimating that the financial leasing market is facing three significant growth prospects.

First, SMEs will undergo digital transformation and industrialisation. The latter accounts for a sizable part, but lacks the funds to invest in equipment, software, and technology to grow and modernise manufacturing. Financial leasing, particularly the leasing of technology assets without a mortgage, will be an effective alternative for firms to overcome the barrier of initial investment cash.
Second, the trend towards green finance and ESG creates opportunities for green loans. Enterprises that consistently practice ESG will have easier access to preferential medium- and long-term capital, lowering capital costs and increasing competitiveness.

Third, there is a surge of public investment and demand for building and transportation equipment. Vietnam plans to promote infrastructure development between 2025 and 2030, creating a high demand for construction machinery and transportation vehicles. This sector is appropriate for establishing high-value, long-term financial leasing contracts.

For the time being, to properly execute Resolution 68/NQ-TW, VILEA suggests that the government take a more open approach to licensing new lessors, as they do not require deposits from residents, hence expanding funding for SMEs without collateral.

In several countries, financial leasing companies outnumber commercial banks by ten times. Vietnam now has 37 commercial banks; thus, the number of financial leasing businesses must increase to 370-400 to provide more funding for SMEs and business households. More crucially, VILEA advocated developing a Financial Leasing Law within the next three to five years. "This law will expand the types of assets that can be leased and regulate forms of capital call, corporate governance, and risk management (accepting higher risks than banks), as well as licensing and bankruptcy issues, in order to create a solid legal corridor for the financial leasing industry to develop," Mr. Hoe said.

To generate impetus for the development of this industry, Mr. Nguyen Thieu Son advocated broadening the scope of import tax incentives, rather than limiting them to projects that currently receive investment incentives. The exemption of value-added tax on imported equipment for leasing purposes, which some countries have implemented with help from the International Finance Corporation (IFC), could be examined for implementation in Vietnam, thereby lowering costs for lessees, particularly SMEs...