Law on SMEs Development: Crucial Step

11:25:15 AM | 7/29/2014

According to Deputy Minister of Planning and Investment Dang Huy Dong, the community of small and medium enterprises (SME) in Vietnam plays a very important role in socio-economic development, claiming a substantial proportion in all types of businesses in Vietnam, and is also a sector of great significance in creating jobs, increasing incomes for workers, mobilizing social resources for development investment and contributing to the State budget. Ministry of Planning and Investment recently held the International Conference “Law on SMEs Development: International Experience and Lessons for Vietnam.”
Regarding the legal framework for this type of enterprise, the Vietnamese Government has developed various policies to support its development. According to Mr Ho Sy Hung, Director of Business Development Department, Ministry of Planning and Investment, to improve the efficiency in the implementation of policies regarding support, coordination and use of resources in support of small and medium businesses, it’s necessary to codify policies in line with characteristics of each period and of Vietnam's economy. According to Mr Hung, currently, SMEs account for more than 97 percent of the total registered enterprises in Vietnam. Recently, there had been 38 programs supporting small and medium enterprises enacted and implemented across the country.
About building law for small and medium enterprises, Mr Miki Miyamoto, Head Advisor of JICA project, believed that the law was not the sole objective, but should be seen as the first step to promote business activities for enterprises. According to Mr Miyamoto, in Japan, the basic law for SMEs built in 1963 had been the second turning point in supporting and developing the sector. The first milestone had been the establishment of SME Department. The Japanese SME Basic Law had pointed out two directions for the policy of SME development. The first ones had been upgrading enterprises structure including modernising equipment, developing technology, improving business management, optimising enterprises’ scale. The second direction had been to overcome the disadvantages of SMEs including policies such as preventing unhealthy competition, improving transactions with subcontractors... From those experiences, Mr Miki Miyamoto recommended the Vietnamese Government to study and analyse the most recent business conditions of SMEs then based on that knowledge to introduce fitting support policy every year. Industry groups and associations of cooperatives should cooperate with the government's research on each industry, based on the necessity of public support measures. After that, SMEs needed to provide accurately real business situation to coordinate with the Government.
Another opinion from Mr Dong Kon Lee, an expert on SMEs, said that in Korea, SMEs accounted for 99.9 percent of the total businesses and claiming 87.7 percent of the workforce, which meant the key sector in creating jobs for the country. Korea currently had 19 Laws relating to SME support, thereby, the country had achieved a strong economic growth, confirming SMEs’ standing as one of the important links in the backbone of the economy.
Through selective absorption combined with application of effective management model of Japan and South Korea, Mr Ho Sy Hung believed that Vietnam needed to soon codify policies as well as support resources to suit with each period’s characteristic of Vietnam's economy. According to Mr Hung, perceptions of small and medium enterprises in Japan and South Korea changed from time to time, to see that the role of that group had been getting more and more important in the socio-economic life of those countries. This was a good study for Vietnam. So in the near future, if Vietnam successfully enacted a support law for small and medium enterprises, that would provide a strong legal tool and solution for authorities of government as well as local level to mobilise stronger resources and implement more powerful operations to support that sector of enterprises.
Anh Phuong