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SMEs may get $58 million in aid

Update: July, 11/2012 - 09:41

 

Hai Yen Ltd Co in the northen province of Lao Cai's Bac Duyen Hai Industrial Zone has accessed preferential bank loans to finance production. Continued reform of the business environment and administrative procedures will also help small- and medium-sized enterprises (SMEs) to access capital at a minimal cost.— VNA/VNS Photo Tran Viet
HA NOI — About US$58.3 million will be spent supporting small-and medium-sized enterprises (SMEs) between 2011-15, according to a plan expected to get Prime Minister Nguyen Tan Dung's approval later this month.

Funding for the plan made by the Viet Nam Chamber of Commerce and Industry and the Ministry of Planning and Investment will come from the State Budget, local budgets and official development assistance (ODA).

The 2011-15 SME development plan targets 350,000 new SMEs established during the period, generating 3.5-4 million new jobs.

Also according to the plan, the country will have 600,000 SMEs by the end of 2015, a 30 per cent increase against the current number of 460,000.

The export value of the sector will account for one fourth of the country's total, and SMEs are expected to make up two fifths of Viet Nam's gross domestic product (GDP).

Addressing a workshop yesterday organised by the chamber, the ministry and the International Labour Organisation, the chamber's secretary general, Pham Thi Thu Hang, said these targets were "not big goals" and the ongoing credit crunch had been taken into account.

However, she raised concerns over the resources to support SMEs because "our support mechanism has by chance mainly focused on big companies".

Many representatives from SMEs at the workshop complained that they had to pay bank interest rates of 15-17 per cent per year, while the State Bank of Viet Nam has already reduced the maximum rate to 12 per cent.

Apart from difficulties in accessing capital, SMEs in Viet Nam also used out of date technologies and an unskilled workforce, according to the VCCI SMEs Support Centre deputy director, Le Thi Thu Thuy.

Hang said support measures for SMEs were much different from large companies because their difficulties were mainly traced back to their small scale. Continued reform of the business environment and administrative procedures would be a must to help SMEs access resources at a minimal cost.

"A big enterprise has enough resources in terms of workforce, technology and financial capacity to access resources, which allows them to move fast and make huge breakthroughs," said Hang. "But SMEs lack everything, so we need to improve our policies to support their development."

Local media last week reported that some loss-making SMEs and those on the verge of bankruptcy even had to pay bribes just to shut down, a story Hang described as "showing the problematic nature of the country's business environment".

Nguyen Hoa Cuong, deputy director general of the MPI's Enterprise Development Agency, said investment in science and technology played a leading role in supporting SMEs.

A number of Government policies would be amended by the end of next year to help SMEs upgrade and adopt new technology to improve business efficiency and reduce environmental pollution.

Land policies should also be improved in favour of smaller enterprises. According to the head of the VCCI, Viet Nam had yet to issue any land policies for SMEs. Some 70 per cent of these enterprises used their owners' land in residential areas for production, which had a bad impact on the environment, she said.

Representing the International Labour Organisation in Ha Noi at the workshop, Maria Luisa Rodriguez said SMEs had a great potential for contributing to economic growth and job creation.

"The SMEs contribute not only to economic growth but also to social development thanks to the development of its communities," she said.

While the national SMEs development plan is awaiting a green light, more than ten cities and provinces across the country have already approved their own plans to support SMEs in the same period (2011-15), and many others are going to finish this important blueprint.

Following their introduction in Viet Nam about two decades ago, the country's SMEs have developed rapidly. The number of these enterprises increased at the rate of about 22 per cent a year between 2006 and 2010, when a total of 370,000 new SMEs and 2.7 million new jobs recorded.

About 95 per cent of enterprises in Viet Nam are small-sized with less than 200 employees, and 2 per cent are medium-sized with between 200 and 300 workers. —VNS

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