|Textile workers make blankets at the factory of Thanh Binh Co Ltd in the northern province of Hung Yen. Small- and medium-sized enterprises are facing difficulties accessing credit. — VNA/VNS Photo Huy Hung
HA NOI — A shortage of capital and difficulty accessing bank loans were the most challenging issues for small- and medium-sized enterprises (SMEs) in both the global and domestic economy during the recent recession.
Nguyen Bich Ngoc, from the Institute of Strategy and Policy on Finance under the Ministry of Finance, said one of the major sources of finance for SMEs was bank loans, but only about 20 per cent of businesses were able to access loans due to their small size and production and a lack of financial transparency.
Experts said supporting SMEs with capital was done in most developed and developing countries with funds assisting SMEs development.
In Viet Nam, the establishment of such a fund was approved 14 years ago and the Government issued a decree and several regulations two years ago, but the fund is not yet operational.
Also, the credit guarantee fund model, which was established 10 years ago, has not helped SMEs because enterprises have not wanted to pay fees for the fund with not-for-profit purposes.
Experts said the goal of establishing a new fund for SMEs development should be new ventures as they required smaller amount of capital. As a result, the fund would help many new SMEs rather than those wanting to expand their production.
Nguyen Minh Phong, from the Ha Noi Institute for Economic and Social Development, said the State should have several mandatory policies requiring commercial banks to reserve loans for SMEs.
General Secretary of the Viet Nam Chamber of Commerce and Industry Pham Thi Thu Hang said a credit rating system would improve access to bank loans while cutting service fees and loan lending procedures.
However, she said credit rating agencies would face many challenges in rating local businesses' credit due to a lack of transparency in the financial capabilities of SMEs.
General Secretary of the Ha Noi Association of SMEs Nguyen Huu Su said all SMEs lacked financial understanding, especially with larger banks.
Tax exemptions have helped SMEs, but they have also impacted on the country's revenue.
Hang said tax incentives over a short term could support businesses, but they would affect the market mechanism.
Director of Market Development under the State Securities Commission Nguyen Son said attracting capital through the stock market or bond issuance by groups of businesses would be a better way of supporting SMEs.
Viet Nam should look at applying a type of capital mobilisation plan alongside an appropriate legal framework, in time for the world and domestic stock market's recovery, Son said.
To Hoai Nam, vice chairman of the Viet Nam Association of SMEs, said the Government should complete the credit guarantee fund model as all 11 existing funds have operated ineffectively.
He added the Government should help the private sector access official development assistance loans while micro-financing policies should be spread throughout rural and remote areas.
Viet Nam now has about 500,000 SMEs. In the past 10 years, the sector has played an important role in the economy, paying taxes worth one-third of the economy's total revenues, creating jobs for 5.6 million workers and contributing to social security. — VNS