Drafting Laws for SMEs

Dang Huy Dong, Deputy Minister of Planning and Investment, said the introduction of the Law on Support of SMEs is essential as the economy is showing signs of hot growth and there are many economic models now. However, he noted that Vietnam must learn experience from successful countries and base on its real situations to obtain the purpose.

 

In fact, the SME community has become an important part of the economy. According to a business survey 2011, SMEs made up 97.6 percent of enterprises in the country. They significantly contributed to GDP growth, created jobs and mobilised domestic and foreign capital sources for production, business and social issue settlement. In addition, they have created talented entrepreneurs and skilled, knowledgeable workers. In the past time, the Government of Vietnam has issued a series of policies to support and promote SME development by creating a legal framework that enables them to access financial resources and technologies. However, there is a big gap from policy to production because the legality of SME support policies is insufficient and weak, said Deputy Minister Dong. So far, Decree 56/2009/ND-CP dated June 30, 2009 on SME development support is the highest specific legal document on SMEs. However, after 5 years of implementation, the decree has exposed limitations and obstacles.

 

Tran Van Dat, Deputy General Director of the Department for Common Lawmaking Issues under the Ministry of Justice, pointed out that this reality occurred because over 80 percent of policies and programmes on SME assistance do not have support assessments. Product quality improvement, technological capacity building and intellectual property also lack criteria for assessing policy and programme impacts on production and business performances of enterprises.

 

"Let alone, many new policies are made for general purpose and lack clear, specific definitions on production space and tax incentives for them. Therefore, if the Law on Support of SMEs is made, it is very necessary to focus and unify policies into a clue to ensure uniformity and improve the efficiency of law enforcement,” he said.

 

Bui Thu Thuy, Deputy Director of Business Development Department under the Ministry of Planning and Investment, said, according to experience in South Korea, the government provided very clear definitions and regulations. For example, when State agencies make procurement plans, they must make sure of the room for SMEs. Moreover, this business block also defined its highly competitive products. And, the Government will provide regulations on the participation of SMEs in public procurements concerning these products, she said.

 

Meanwhile, Japan clearly names packages for SMEs, she added. From experiences in these countries, the upcoming amended Law on Procurement should add incentives for SMEs in public procurement. Accordingly, the Government should have policies prescribing the minimum ratio of public procurements for SMEs to expand the market. Every year, State agencies announce procurement plans and define the reserved ratio for SMEs.

 

Thus far, Vietnam has no regulations on the linkage of large enterprises and SMEs. Meanwhile, South Korea has a law to this regard, which stipulates that the public sector plays a leading role in connecting these two company blocks. Hence, Vietnam should clarify this content in the upcoming law. For example, the Government will give tax supports for big businesses if they purchase inputs from SMEs.

 

The authorities need to complete the draft law for approval and then enforcement to create a healthy macroeconomic environment with fair competition, increase opportunities for SMEs, according to many economists.