Ho Chi Minh City (VNA) – Small and medium-sized enterprises (SMEs), which account for nearly 98% of active businesses in Vietnam, continue to face persistent difficulties in accessing finance.
As the private sector takes on a more central role under the Politburo's Resolution No. 68-NQ/TW, experts and business representatives say Vietnam needs a more comprehensive approach to supporting SMEs. This includes improving institutions, making financial support tools more effective and reshaping the financial system to better suit the characteristics of SMEs.
Building stronger support ecosystem
Expanding into new markets, investing in technology, embracing digital transformation and joining global supply chains are common goals among SMEs. However, limited access to capital remains their biggest obstacle.
According to the Ministry of Finance, although SMEs make up nearly 98% of operating enterprises, they account for only about 20% of total outstanding bank credit. The gap highlights both the significant room for expanding financing and the shortcomings of current support mechanisms.
Existing policies, including the SME Development Fund, Credit Guarantee Funds and preferential lending programmes, have yet to produce the expected results. Around 70% of SMEs still struggle to obtain bank loans, mainly because they lack collateral.
The performance of credit guarantee funds has also fallen short of expectations. Strict capital preservation requirements have made these funds highly cautious in issuing guarantees, causing guaranteed outstanding loans to shrink steadily to just 99.6 billion VND (3.8 million USD) by August 2024.
Another challenge is the limited capacity of businesses themselves to make use of support policies. More than 93% of Vietnamese SMEs are classified as small or micro enterprises, many of which lack the financial resources, technology and skilled workforce needed to meet co-financing requirements or prepare the documentation required by lenders.
Dang Huynh Uc My, Vice Chairwoman of the Vietnam Association of Small and Medium Enterprises (VINASME), said businesses today face not only financing constraints but also growing market pressures and increasingly demanding legal requirements.
She stressed that support policies should focus on building a comprehensive development ecosystem rather than offering only short-term assistance.
VINASME is working to improve policy mechanisms and implementation conditions so it can provide long-term support for businesses, she said. One priority is helping household businesses transition into formally registered enterprises, enabling them to participate more fully in the formal economy.
According to My, access to credit is only one element of business development. A sound business model remains essential because financial institutions assess not only collateral but also a company's commercial viability.
Ha Huy Ngoc, Director of the Centre for Strategy and Policy under the Institute of Vietnam and World Economy, said improving SME support requires a coordinated ecosystem with transparent regulations, flexible policy tools, professional implementation forces and businesses capable of absorbing policy support.
He said reforms should focus not only on increasing financial resources but also on improving institutional quality and implementation efficiency, shifting from an administrative support model to one centred on enabling business development.
Diversifying financing channels
Do Thien Anh Tuan, a lecturer at the Fulbright School of Public Policy and Management under Fulbright University Vietnam, said the issue of SME financing has persisted for decades because its underlying causes have not been adequately addressed.
He noted that Vietnam's financial system is largely designed for larger companies with valuable collateral and transparent financial statements. The stock market is generally unsuitable for small businesses and household enterprises, while commercial banks continue to rely heavily on asset-based lending.
To address the problem more fundamentally, Vietnam needs to diversify financing channels instead of depending almost exclusively on bank credit, he said.
Tuan suggested that development finance institutions, including the Vietnam Development Bank and the Vietnam Bank for Social Policies, should play a greater role in providing specialised lending programmes for SMEs. He also called for reforms to the Credit Guarantee Fund mechanism to improve its ability to provide guarantees.
He pointed to another weakness in Vietnam's financial system – the limited network of microfinance institutions. The country currently has only six or seven licensed microfinance organisations, far below the level needed to serve an estimated 5–6 million non-agricultural household businesses. A more supportive legal framework is therefore needed to encourage the establishment of new financing models.
Meanwhile, the Ministry of Finance is proposing amendments to the Law on Support for Small and Medium-sized Enterprises to remove barriers to credit access.
Nguyen Thi Bich Thuy, head of the SME Division under the Department of Private Enterprise and Collective Economy Development, said the draft law encourages banks to move beyond traditional collateral-based lending by assessing businesses through data, cash flow and supply chain performance.
Banks would also be encouraged to expand cash flow-based lending and supply chain finance while accepting a broader range of collateral, including movable assets, intellectual property and future assets.
According to Thuy, these reforms would not only expand credit access for SMEs but also encourage financial institutions to develop assessment models better suited to the needs of smaller businesses. Allocating capital based on business performance and cash-generating capacity, rather than relying primarily on collateral, would improve financing opportunities and strengthen investment, innovation and the competitiveness of Vietnam's private sector./.
