SMEs face uphill battle for foreign investment

At a recent seminar jointly hosted by Standard Chartered Vietnam and Vietnam Chamber of Commerce and Industry (VCCI), Ms Pham Thi Thu Hang, general secretary of VCCI, said that SMEs have significantly contributed to generating jobs and boosting trade activities and economic growth of Vietnam.

Although SMEs make up 98% of total number of in Vietnam, they contribute a mere 20% to the country’s total revenues.

Additionally, the rate of SMEs involvement in the global trade network remains low, at 21%, when compared to other Asian countries such as Malaysia where it is 34% and the Philippines where it’s 33%. This lack of impact on a global scale is the most glaring weakness of Vietnamese SMEs.

As such, experts have underlined the importance of providing necessary support for SMEs in order to bring about sustainable and effective development.

Pham Hoang Tien, director of VCCI Small and Medium-sized Enterprises Support Centre, said only 14% of SMEs have succeeded in attracting foreign clients or partners. In addition, due to the lack of co-ordination and a high-skilled labour force, the quality of human resources has not met the necessary requirements, all of which have hindered the collective ability of SMEs to attract foreign investment.

Mr Nirukt Sapru, General Director of Standard Chartered Vietnam, said that during the past two decades Vietnam has greatly benefited from the expansion of trade exchanges and investment with other nations across the globe and SMEs have played an important and decisive role in this. 

Sharing their views at the seminar, delegates underlined the need for policy reformation to help SMEs expand their business operations in the international market. Tien noted that despite a government policies aimed at improving the overall business climate, enhancing SMEs competitive capacity in the international integration process.

Many businesses have argued that Government support remains at the macro level without practicality that tackle the obstacles they face.

In particular, it is essential to work towards a comprehensive payment solution and effective foreign exchange services in order to help businesses conduct international trade activities efficiently. This needs the engagement of businesses operating in such fields as banking, logistics, and import-export services.

Mr Vo Tri Thanh, former Vice President of the Central Institute for Economic Management, said that at present many banks have not paid attention to credit conditions for SMEs, impeding their ability to borrow money.

To have access to banks capital businesses first have to prove their transparent financial information and debt paying ability.

Attendees highlighted the crucial role of the State in developing SMEs in the context of international economic integration as it has played the role of arbitrator in protecting property rights of individuals and is increasingly becoming active in international transactions.