Report Overview

Globalization, growing international trade, and increasing adoption of advanced technologies are expected to boost the growth of Vietnam Trade Finance Market during the forecast period between 2024 and 2030.

Vietnam Trade Finance Market - Industry Trends & Forecast Report, 2030

Vietnam Trade Finance market size is projected to grow at a CAGR of 4.16% during the forecast period between 2024 and 2030. Major growth factors for Vietnam Trade Finance Market include flourishing international trade with improving supply chain and export performance. Trade finance providers, such as banks, are leveraging advanced technologies, such as automation and artificial intelligence (AI), to improve accessibility to these tools and reduce costs. In addition, governments and financial institutions are also focused on raising awareness, particularly among small and medium-sized enterprises, which is anticipated to drive Vietnam Trade Finance Market during the forecast period in analysis.

Trade Finance – Overview

Trade finance is the process of providing financial support for the exchange of goods or services in a commercial transaction, extending from the supplier to the ultimate buyer. "Trade finance," also known as "export finance," encompasses a range of financial instruments employed by organizations involved in global trade and commerce. It includes banks, trade finance firms, export credit organizations, importers, and exporters. Trade finances protect businesses against the risks associated with international trade, such as currency fluctuations and political unpredictability.

Vietnam Trade Finance Market

Growth Drivers

Growing Need for Protection amid Instability

The increasing instability and threats associated with the import and export of goods and services, particularly in the international market, propel the demand for trade finance in Vietnam. Trade finance products are emerging as effective tools for companies to maintain their working capital and minimize the risks of cross-border transactions. The exporters are concerned about receiving payment for the goods they sell, while the importers are concerned about receiving goods from sellers against their advanced payments. Trade finance protects exporters from non-payment of goods through letters of credit and cash advances. In addition to handling matters associated with finances, trade finances also protect companies from other complications and threats such as legal complexities, terrorism, and war, which is propelling the growth of Vietnam Trade Finance Market.

Challenges

Inaccessibility to Trade Finance Services

Low awareness and inaccessibility to trade finance services act as major restraints to Vietnam Trade Finance Market. Experts suggest that the Trade Finance Market of Vietnam is highly segmented, traditional, and underutilized, which acts as a major barrier to its market growth. A report by the International Finance Corporation (IFC) and the World Trade Organization (WTO) reveals that Vietnamese banks provided trade finance support to only about 21% of the country's total merchandise sales, which is drastically low compared to other developed countries. The lack of awareness, particularly among small and medium-sized enterprises, also hinders the growth of Vietnam Trade Finance Market.

Impact of Escalating Geopolitical Tensions on Vietnam Trade Finance Market

Intensifying geopolitical tensions among countries spreading across the major regions are expected to favor Vietnam Trade Finance Market. Growing geopolitical tensions, such as Russia-Ukraine war and Israel ongoing war in the Middle East region, increase the risks associated with international trade. As a result, the demand for trade finance is projected to surge in Vietnam amid these tensions to keep their operations going and maintain relations with their international buyers and suppliers. Trade finance tools protect businesses from complications arising from geopolitical tensions, such as currency fluctuations, changes in trade regulations, or disruptions in the supply chain.

Vietnam Trade Finance Market

Segmental Coverage

Vietnam Trade Finance Market – By Product Type

Based on product type, Vietnam Trade Finance Market is segmented into commercial letters of credit, standby letters of credit, guarantees, and others. Commercial letters of credit hold the largest share in the Vietnam Trade Finance Market. Letters of credit provide payment security to sellers against their goods and services in international trade transactions. This product type is particularly in strong demand among SMEs dealing with new suppliers or suppliers outside of Vietnam. The easy accessibility of letters of credit from providers is another factor in its growing demand in the market.

Vietnam Trade Finance Market – By Provider

On the basis of provider, Vietnam Trade Finance Market is segmented into banks, trade finance houses, and others. The bank segment accounts for the largest market share of Vietnam Trade Finance Market by provider. Banks hold a reputation as the most trusted provider of trade finance because of their extensive network and secured international relations. They help enterprises efficiently deal with cross-border trade and provide delivery assurance. Furthermore, the availability of diverse trade finance products with banks and easy customization according to the needs and business propel the market growth of the bank segment.

Vietnam Trade Finance Market – By Application

By application, Vietnam Trade Finance Market is split into domestic and international segment. The international trade segment holds the largest share of Vietnam Trade Finance Market by application, owing to the robust manufacturing export sector of the country. Vietnam is a leading manufacturer and exporter of many commodities, including integrated circuits, broadcasting equipment, office machine parts, and textile footwear, which have strong demand in the international market. Trade finance helps companies mitigate risks involved in international trade, such as currency fluctuations and geopolitical tensions, to improve the sustainability of their businesses, which drives its market growth.

Vietnam Trade Finance Market – By End User

Based on end user, Vietnam Trade Finance Market is segmented into traders, importers, and exporters. The exporters segment dominates Vietnam Trade Finance Market by the end user. The expanding international trade is fueling the demand for trade finance among Vietnam exporters to ensure availability of working capital and the smooth running of their operations. In addition, trade finance products also protect exporters from risks associated with cross-border transactions. The provider institutions offer various products to these exporters, including trade loans and supply chain finance, which protect their investments and help them absorb any substantial risks.

Competitive Landscape

Vietnam Trade Finance Market is highly competitive, as a number of companies are competing to gain a significant market share. Key players in the market include ANZ, VietinBank DE, Standard Chartered, BIDV, JP Morgan Chase, Citibank, Far East National Bank, Wells Fargo, and Visa International. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In September 2024 – Maybank, a commercial banking company, announced an extension of green trade finance for the Ca Mau 1 Wind Power Project in Ca Mau, Vietnam.

Scope of the Report

By Product Type

• Commercial Letters of Credit

• Standby Letters of Credit

• Guarantees

• Others

By Provider

• Banks

• Trade Finance House

• Others

By Application

• Domestic

• International

By End User

• Traders

• Importers

• Exporters