SMEs need more assistance

350,000 SMEs in operation by 2015

The Government has approved a plan for SME development in the 2011-2015 period to achieve deeper integration into the global economy.

Under the plan, 350,000 SMEs will be operating in the next three years, bringing the total number to 600,000 by December 2015.

Making handicrafts

Currently, there are more than 400,000 SMEs in operation and about 70,000 new SMEs will take shape annually. They contribute approximately 25 percent to Vietnam’s total export earnings, 40 percent to GDP, 30 percent to the State’s budget, and 35 percent to the country’s total social investment.

In the next three years, the SMEs are expected to create 3.5-4 million news jobs, fulfilling more than 65 percent of Vietnam’s employment.

Seeking support from macro policies

Pham Thi Thu Hang, Director of the SMEs Support Center under the Vietnam Chamber of Commerce and Industry, says that SMEs should take a more active role in diversifying their products, upgrading their production lines, expanding their distribution networks, and tightening their partnerships with material suppliers.  As a result, there will be a fall in excess stock levels and better customer services.

SMEs should give priority to adapting themselves to changes in the business climate while broadening their domestic markets to protect their brand names in the face of price and exchange rate fluctuations, she suggests.

According to Rosana Mirkovic, Head of SME Policy at the Association of Chartered Certified Accountants (ACCA), macroeconomic Government interventions are needed to engender better conditions for SME development. Completing the relevant legislative framework will play a vital role.

Le Manh Hung, Deputy Head of the Business Development Department under the Ministry of Planning and Investment (MPI), says SME support agencies are still rudimentary because they are lacking in regulations, facilities, and personnel.

He stresses the importance of establishing information channels and statistics systems, linking the relevant ministries, agencies, and localities more closely to provide practical assistance to SMEs.

Urgent measures to overcome challenges

The MPI has proposed eight groups of measures to boost SME development in the 2011-2015 period. They include completing the legislative framework regulating SME operations, providing financial assistance and preferential credit loans, promoting the application of technology, developing human resources, updating market information, expanding markets, building business support agencies, and furthering business management skills.

Hung says some initiatives warrant immediate implementation. SME support funds should be created, high technology developments prioritised, and SME innovation encouraged - all aiming to increase added value, better competitiveness, and protect the environment.