SMEs Supported for Economic Integration

10:09:12 AM | 11/30/2022

To make Vinh Phuc one of the industrial centers of Vietnam as per the resolution of the 17th Provincial Party Congress (2020-2025 term), small and medium-sized enterprises (SMEs) are defined to play a key role in the structure economy as they account for up to 97% of total enterprises in the province.

According to an official from the Vinh Phuc Department of Planning and Investment, in 2013 - 2020, SMEs contributed more than 15% of the province's gross regional domestic product (GRDP), accounted for 20.8% of the total investment fund; made up for 4.4% of total budget revenue; and created 70,000 new jobs to speed up the labor force shift out of agriculture and rural areas to industry and service sectors. However, to achieve this goal, local SMEs must gradually develop in both number and quality, accelerate scientific and technological application and reforms to enhance productivity and product quality, thus enhancing competitiveness and supplying industrial components for key industries. They can link and cooperate with FDI firms participating in global supply and value chains amid international integration.

After the Law on SME Support took effect, mechanisms and policies on SME development support in Vinh Phuc have been gradually improved to provide a more favorable environment for business development.

In 2013-2020, the province introduced 188 sites, covering 260 ha, for SMEs to carry out their projects; signed land lease contracts of 3,000 ha with more than 500 entities; and granted land-use right certificates of 700 ha to more than 650 companies.

Currently, Vinh Phuc has more than 13,000 companies, with more than 90% being SMEs. Most of them have limited capital, facilities, management skills, business administration, marketing, advertising and branding capabilities.

To promote innovative SME startups, the province supported companies to access loans from commercial banks and credit institutions; developed human resources; introduced investment policies for leased factory construction for SMEs; assisted investment and trade promotion, market expansion, business connection; and helped them enhance productivity, product quality and technological innovation.

In 2013-2020, credit institutions offered more than 17,000 loans worth over VND67 trillion to SMEs; exempted or reduced lending rates on more than VND2,800 billion loans for 413 SMEs; provided preferential loans worth over VND42 billion for nearly 6,000 companies; and rescheduled repayment terms of VND3,300 billion loans for 1,000 companies.

In 2020, before difficulties against SMEs due to the COVID-19 pandemic, the province supported more than 800 businesses to extend tax and land rent payment terms and reduced electricity bills for local companies. The Science and Technology Development Fund lent VND79 billion to 23 scientific and technological application projects and the Environmental Protection Fund lent VND46 billion to 21 companies.

The province organized more than 400 training courses on business administration, business startup and trade promotion skills for SMEs; opened 15 startup conferences, seminars and forums; introduced entrepreneurship as a subject at various colleges and universities in the province.

Through SME support programs, the total corporate investment capital reached nearly VND50 trillion in 2023-2030, accounting for more than 20% of total social investment capital. 19 enterprises were funded more than VND49 billion by the Ministry of Science and Technology, and six companies registered seven scientific research projects. The province also guided 45 companies to register for national quality awards. The activities significantly helped raise the province's total budget revenue to VND32,896 billion in 2021, or 107% of the forecast, to stand among the biggest collectors of budget revenue in the north.

The industry 4.0 trend, based on compliance with commitments to trade agreements such as AFTA, APEC and WTO, poses great challenges that require SMEs to constantly innovate and improve competitiveness to meet market requirements. Vinh Phuc introduced key solutions to this by materializing central SME support policies based on the Law on SME Support; encouraged SMEs to establish new ones; and facilitated business households to be transformed into enterprises.

Vinh Phuc province is developing the SME Support Scheme for the period of 2021-2025 and will submit it to the Provincial People's Council for consideration. If approved in the near term, besides supplementing and concretizing old support policies suitable to the new context, SMEs will receive greater support such as legal advice, business establishment and entry into value chains.

 By Huong Hau, Vietnam Business Forum