L. Joseph
Press Release No. 97/37
Phone: (202) 473-7700
Fax: (202) 676-0365
E-mail: LJoseph@Worldbank.org


HANOI, VIETNAM, Oct. 29 - -Mr. Jannik Lindbaek, Executive Vice President of the International Finance Corporation (IFC), announced today that IFC would make its first investment in Vietnam's financial sector to establish Vietnam International Leasing Company Limited (VILC), the first leasing company in the country. "IFC's investment will play a pioneering role in the establishment of a leasing industry," said Mr. Lindbaek. "It will also support small and medium-sized enterprises (SMEs), the backbone of Vietnam's private sector and the main engine for economic growth."

VILC will write financial leases, which will enable local enterprises to procure a wide variety of capital goods, including machinery, office, and plant equipment. On an average, VILC is likely to be writing leases of US$25-30,000 for smaller or micro enterprises and US$100-150,000 for medium-sized companies.

VILC's financial support for businesses, particularly SMEs, will enhance the contribution and role of the private sector in the country's economy. It is also likely to have a strong impact on Vietnam's financial system by extending and improving credit delivery and introducing new financial products to the local market to encourage capital formation and investment. VILC will be based in Ho Chi Minh City and the business focus will initially be in the HCMC region.

IFC's financing package consists of a loan of up to US$15 million, with up to US$5 million for IFC's own account and up to US$10 million for the account of participants. IFC will also invest up to US$0.75 million for a 15% equity stake in VILC. This represents IFC's first equity investment in a Vietnamese company.

VILC's local sponsor is the Industrial and Commercial Bank of Vietnam, the largest industrial financing institution in the country. The technical partner and largest equity holder is Korea Industrial Leasing Corporation, one of Korea's top leasing companies. Nippon Credit Bank of Japan and Banque Francaise du Commerce Exterieur of France will also be equity holders, along with IFC.

Mr. Lindbaek added that IFC is pleased to have assisted in creating the enabling environment for the project, which represented a major breakthrough for the industry. He was referring to the fact that VILC evolved from a comprehensive technical assistance operation, begun in 1991, which consisted of advising the Vietnamese authorities on leasing; developing an appropriate legal framework for the licensing, regulation, and conduct of leasing activity; and explaining the impact of leasing at various forums. IFC worked closely with the State Bank of Vietnam, evaluated the prospects of introducing leasing, and advised on the legislative measures required. In late 1995, the authorities enacted a leasing law, providing the framework for the establishment and operation of finance leasing companies.

Mr. Lindbaek also announced that IFC would widely disseminate the Vietnamese translation of an executive summary, recently prepared by the Corporation, on Leasing in Emerging Markets, which states that leasing is an efficient way of financing the acquisition of equipment by SMEs in emerging markets such as Vietnam.

IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.