Lifting Barriers, Facilitating SME Access to Capital

Small and medium-sized enterprises (SMEs) account for over 95% of total businesses in Vinh Phuc province, with the average annual growth of over 7.7% in 2013 - 2018. SMEs have significantly helped local economic development and generated jobs for thousands of local laborers.

To achieve these fruitful outcomes, in recent years, Vinh Phuc province organized many dialogues with the business community, promptly requested the settlement of hardships, and provided them with perfect conditions to develop. At the same time, the province requested competent agencies to speed up administrative reform, reduce the time need to settle administrative procedures, eliminate inappropriate and ineffective policies that obstruct business operations; support enterprises to improve productivity, product quality and technology innovation, promote trade and expand markets. Knowing that capital has a direct impact on business development, together with mechanisms and policies of the Government of Vietnam, the Vinh Phuc Provincial People’s Committee has carried out various practical solutions to help businesses quickly access bank loans.

According to a report by the State Bank of Vietnam (SBV) – Vinh Phuc Branch, outstanding loans for business of local credit institutions exceeded VND36 trillion as of October 2019, accounting for nearly 50% of total outstanding loans and rising more than 10% from the end of 2018. Among nearly 3,000 indebted enterprises, over 2,600 are small and medium in size. This number of borrowers is quite modest relative to nearly 7,000 SMEs in the province.

In order to solve tough matters and facilitate SMEs to stabilize and develop operations, in late September 2019, the Government issued Decree 74 on amendments and supplements to some articles of Decree 61 on employment support policies and the National Employment Fund to raise loans, sourced from the fund, for SMEs, cooperatives, business households and workers to create, maintain and expand jobs. This Decree, officially effective on November 8, 2019, has the following main contents: Raising the loan value for each business project to VND2 billion from VND1 billion, but not more than VND100 million per employee, doubling the previous value, to create jobs. The new ruling also clearly states that, for a loan of VND100 million or more, business facilities must have security assets under the law. In addition, the loan term is also increased from no more than 60 months to a maximum of 120 months.

Earlier, in May 2019, the Government also issued Decree 39 on organization and operation of the SME Development Fund operated as a wholly State-owned one-member limited liability company model, administered by the Ministry of Planning and Investment which represents State ownership and exercises State rights and obligations. The fund is responsible for supporting small and medium-sized enterprises to borrow money in two forms: Directly from the fund or indirectly to capital allocated at commercial banks. This helps improve business competitiveness, increase incomes and create jobs.

Duc Binh (Vietnam Business Forum)