Solutions and recommendations for developing the support industry in Ho Chi Minh City have been put forward at a conference titled “Developing the support industry in association with small- and medium-sized enterprises in HCM City” held in the southern economic hub on January 27.

The conference was organised to provide a forum for experts and managers to discuss the role of small- and medium-sized enterprises (SMEs), including how to utilise them as driving forces of the support industry and increase their contributions to the city’s industry and the nation’s economy.

Enterprise representatives and city authorities agreed that the support industry’s weakness is largely attributed to the lack of existing policies suitable for each section of the industry.

At the forum, experts and enterprise representatives listed a slew of recommendations and solutions to breathe new life into the sluggish support industry.

Among their recommendations are new tax policies such as reducing, applying a 10 percent income tax for the first 15 years, and offering tax breaks for materials used in processing export products and products replacing import products.

Assisting enterprises with cleared land, offering tax exemptions for enterprises who build apartment buildings and workshops in the early years, and devising policies to update the knowledge and expertise of managers and skilled employees were also put forth at the forum.

Participants also pointed out that enterprises often face difficulties gaining access to support policies due to procedural barriers.

According to Tat Thanh Cang, Vice Chairman of Ho Chi Minh City’s People’s Committee, SMEs account for 95 percent of all enterprises and 42 percent of the work force in the city’s industrial sector.

SMEs, however, are producing only 21 percent of the total revenue, 6.8 percent of total profits and contributing just 9.8 percent of the City budget. The ratio of profits to the total asset is just 1.8 percent, compared with 6.9 percent for the entire industry.

Addressing the forum, Le Thanh Hai, Secretary of the Ho Chi Minh City Party Committee, said four key industrial sectors – electronics, mechanics, pharmaceutical chemistry, and food processing – account for 65 percent of the whole industry, reflecting a growth both in quality and scale.

The growth, however, is still below expectations partly due to the sluggish support industry, unable to take part in the production chain at home, Hai said.

According to Hai, in upcoming years, the city must examine and revise loan programmes for SMEs who are unable to provide adequate collateral but demonstrate feasible investment projects.

Besides streamlining administrative procedures to help facilitate enterprise access to preferential policies, breakthrough solutions are needed to address obstacles for around 118,000 SMEs, Hai added.-VNA