Manila, Mar 16, 2006 AEST (ABN Newswire) - Asian Development Bank (ASX: ATB), through its Poverty Reduction Cooperation Fund, from the Government of the United Kingdom, is supporting the establishment of microcredit institutions in the People's Republic of China (PRC).
ADB will help develop relevant microcredit systems and regulatory guidelines, as well as a tendering mechanism to attract foreign and local investment, for two pilot sites - Jiangkou County of Tongren Prefecture of Guizhou Province and Dongsheng District of Erdos City of Inner Mongolia Autonomous Region. The bidding processing was kicked off on 13 March 2006.
Microfinance is still relatively new in the PRC. While the first experiments on PRC's microfinance practice began in the mid-1990s, over the past 10 years, microfinance institutions (MFIs) had developed slowly and failed to cast any significant impact on the large market or microfinance products in the PRC.
"The lack of human resources, capital, and knowledge has been blamed for the slow development of microcredit in the PRC," says Ying Qian, and ADB. "The key constraint, however, is the inadequacy of the legal and regulatory environment for microfinance."
The PRC Government and financial regulatory institutions are now carrying out a new attempt to introduce a competition mechanism into the rural financial sector by establishing a financial permission system for credit-only microfinance institutions to operate.
In the absence of a uniform policy for microfinance legislation and regulation, under which the private sector can apply for a microfinance permission to operate anywhere in the PRC, the PBC have proposed five pilot provinces in which they wish to allow private microcredit institutions (MCIs).
"The development of clear and consistent national legislation and regulatory procedures and structures is critical to the establishment of a vibrant private sector led microfinance industry," adds Mr. Ying. "This would allow a more dynamic market-led approach in which the private sector identified microfinance opportunities and responded accordingly."
Invitation to submit proposals will be sent directly to at least three randomly selected investors which have the capacity to handle the project. The tender will also be published in the China Development Brief magazine, on the Microfinance Gateway, the Jiangkou/Guizhou government web site, Erdos/Inner Mongolia government web site, and ADB's web site. ADB's web site also has market demand studies on Jiangkou County and Dongsheng District that can be used as reference materials for potential investors.
The Jiangkou County Microcredit Pilot Tendering Committee and Inner Mongolia Microcredit Pilot Administrative Office will be responsible, respectively, to review all tenders submitted prior to the closing deadline and will select an applicant with the greatest merit based upon their stated expertise in the field of microfinance, the management team proposed, size of capital commitments and their proposed technology and methodology.
Contact
Mr Ying Qian
Asian Development Bank
6 ADB Ave, Mandaluyong
Metro Manila
Philippines
Tel. (632) 632-5945
Fax: (632) 636-2424
Email: yqian@adb.org
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