New law drafted to fuel boom in SMEs hinh anh 1Agricultural products being processed at Nam Huy Dong Thap Company in southern Dong Thap Province. A law on extending support to SMEs company is being drafted (Photo: VNA)
Hanoi (VNA) - Vietnam is drafting a law on extending support to small and medium-sized enterprises (SMEs).

It is part of the government’s determined efforts to promote the development of the business community and double the number of firms to one million by 2020.

The Ministry of Planning and Investment will submit the draft law to the government next month and to the second meeting of the 14th National Assembly (NA) for discussion.

This will be the first time support for SMEs is legalised in order to provide a comprehensive approach. SME’s account for 97 percent of businesses in Vietnam, contribute more than 40 percent to the gross domestic product (GDP) and generate 52 percent of jobs.

Deputy Minister of Planning and Investment Dang Huy Dong said Vietnamese SMEs were facing several difficulties in loan, land and technology access and market expansion, partly explaining the private sector’s modest competitiveness and vulnerability to policy and social vagaries, Dong said.

Dong said support policies for SMEs are currently provided by various legal documents, with a majority of them being support for businesses in general, placing SMEs at a disadvantage compared to large firms.

The ministry’s statistics reveal that as of the end of 2015, the outstanding loans of SMEs accounted for just 23 percent of the total outstanding loans, although they make up 97 percent of the business community.

Dong said legalising support for SMEs was not a subsidy, adding that all forms of support will be compliant with international commitments.

At a three-day consultation conference held by the ministry in HCM City that ended on June 11, Deputy Head of HCM City’s NA Deputy Delegation Tran Du Lich said the draft should turn a spotlight on the strategic significance of SME development in the country’s industrialisation process, adding that SME development support would promote social progress and equity.

Experts at the conference said the draft should define the roles of local authorities in giving assistance to businesses, as seen in other countries. Business associations also agreed to set up a national SME development council. Vice Chairman and General Secretary of the Vietnam Association of Small and Medium Enterprises To Hoai Nam suggested that the government lay out the details of the council’s functions, missions and organisational structure.

Experts also said support for business households that played an important role in the economy should also be considered.

While state-owned enterprises (SOEs) were undergoing a thorny restructuring process, Vietnam has recognised the private sector, mainly comprising SMEs, as an important driver of the nation’s economic development.

Deputy Prime Minister Vuong Dinh Hue said at the first-ever Vietnam private economic forum that the government would improve the business climate to enhance national competitiveness and ensure a level playing ground for businesses.-VNA