Delegates cut the ribbon to launch the USAID LinkSME project in Hà Nội on September 24. — VNA/VNS Photo Văn Điệp

HÀ NỘI — The US Agency for International Development (USAID) with Việt Nam’s Government Office and the Ministry of Planning and Investment kicked off the USAID Linkages for Small and Medium Enterprises (USAID LinkSME) project today in Hà Nội.

With a planned budget of US$22.1 million over five years, the USAID LinkSME project will co-ordinate with the Government Office and Ministry of Planning and Investment (MPI) to improve supply chain links for small- and medium-sized enterprises (SMEs) and the ability of business associations to support the development of SMEs.

Speaking at the event, Minister and Chairman of the Government Office Mai Tiến Dũng said the LinkSME project linked reforms to the overall business environment with individual industry and Government reforms.

The project aimed to contribute to systematic changes in the business environment from reforming institutions and simplifying administrative regulations and procedures to reducing the cost of implementing administrative procedures to improve competitiveness among local enterprises, he said.

At the same time, it would improve local businesses’ ability to integrate with regional and global economies as well as the global value chain of SMEs, he said.

“Support for the development of Vietnamese SMEs under the LinkSME project will be of importance for sustainable development and for Việt Nam’s ability to overcome the middle-income trap in the coming decades," Dũng was quoted by the Vietnam News Agency as saying.

Minister of Planning and Investment Nguyễn Chí Dũng highly appreciated this project and said that it would help Việt Nam’s Government solve the problems facing SMEs and strengthen their ability in the selected industries. 

Local SMEs played a very important role in Việt Nam's economy, accounting for 98 per cent of the total number of businesses and 45 per cent of the national GDP, but there were still some limitations, especially a lack of linkages with global supply chains, said Daniel J Kritenbrink, US Ambassador to Việt Nam.

While foreign direct investment in Việt Nam had reached historic levels, the spillover benefits to Việt Nam’s domestic economy had been dampened by the limited supply chain linkages of Vietnamese SMEs, according to USAID.

USAID LinkSME aims to address this gap by strengthening the capabilities of the intermediary organisations in Việt Nam, such as business associations, export development centers and SME promotion agencies, to facilitate the supplier-buyer relationships between Vietnamese SMEs and lead firms located in Việt Nam and expand Vietnamese SMEs’ capacity to participate in manufacturing supply chains.

Minister Nguyễn Chí Dũng said with strong reforms from the Government, Vietnamese enterprises had made remarkable progress over the past two decades. At present, Việt Nam has more than 730,000 businesses in operation, of which more than 97 per cent are SMEs.

SMEs make significant contributions to the country's economic growth and sustainable development. They are also an important link in the value chain to enhance the competitiveness of Việt Nam's export products and the establishment of industrial complexes in the electronics, textile and fishery industries.

However, Dũng said Vietnamese SMEs did not have the capital to invest in technological innovation or expansion of production scale. Most had poor human resources, and links between SMEs and large enterprises were limited.

This year, the Prime Minister has asked the Government to implement tasks and solutions for comprehensive reform in specialised inspection activities, and to reduce and simplify administrative procedures as well as business and investment conditions.

To deal with this, the Government has issued three decrees to reduce and simplify 106 business conditions, bringing the total number of business conditions cut to 3,451 since 2018. Việt Nam has also cut inspections on specialised productions lines to 6,776 from 9,926, and 30 related administrative procedures have been simplified, saving VNĐ6.3 trillion (US$273.9 million) per year. — VNS