Recognizing the significant contribution of SMEs to Vietnam’s economic growth, the government, along with various organizations, is committed to building a robust financial ecosystem tailored to their unique needs.
This initiative, as explained by Trinh Thi Huong, Deputy Director of the Enterprise Development Agency (EDA), aims to boost access to finance, encourage innovation, and ultimately support the sustainable development of this vital sector. SMEs form the backbone of Vietnam’s economy, with approximately 40,000 enterprises and five million individual business households.
According to the Ministry of Finance (MoF), the private sector, driven by SMEs, accounts for a substantial share of the country’s economic indicators: 51% of GDP, over 30% of the state budget, 82% of total employment, and nearly 60% of social investment capital.
Despite their critical role, SMEs often encounter challenges, with access to finance being a prominent hurdle. Traditional banks often view these businesses as high-risk, which limits their financing options.
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| A customer conducts a transaction at a bank in Hanoi (Photo: VNA) |
As a result, the vast majority of SMEs face difficulties in obtaining loans or are burdened with high-interest rates, hindering their growth prospects. Compounding this issue is the varying level of financial literacy among SME owners, making it challenging for them to navigate the complex world of finance and investment. Many are unaware of the financial products available, further exacerbating their funding challenges.
Building a Comprehensive Financial Ecosystem
To address these challenges, the Vietnamese Government is collaborating with financial institutions and business associations to create a holistic financial ecosystem for SMEs. This ecosystem aims to increase financial inclusion by improving access to funding, enhancing financial literacy, and promoting innovation.
Le Thi Xuan Quynh, from the Department of Policy, Business Environment, and International Cooperation under the EDA, emphasized that expanding the range of financing options available to SMEs is a key goal of this initiative. By diversifying funding sources, SMEs can reduce their dependence on traditional banks and find more tailored solutions.
Additionally, banks are encouraged to develop customized financial products for SMEs, offering lower interest rates, longer repayment terms, and flexible collateral requirements. There is also a focus on reviewing and addressing the challenges in implementing Government Decree No. 34/2018/NĐ-CP, which pertains to the establishment and operation of credit guarantee funds for SMEs, with the aim of facilitating the resolution of issues faced by existing guarantee funds and exploring risk reserve fund mechanisms.
Local authorities are urged to prioritize funding for local guarantee funds for SMEs and continue their collaboration with the banking sector through the Bank-Enterprise Connection Programme, ensuring timely identification and resolution of business challenges. The Vietnam Association of Small and Medium Enterprises, along with industry associations, should strengthen their role as a vital link between SMEs and credit institutions, providing market information, trade promotion support, and legal protection for member enterprises.
Unlocking Vietnam’s Potential: IFC and Switzerland’s Strategic Alliance for Supply Chain Finance
The International Finance Corporation (IFC), in collaboration with the Swiss government, has embarked on an ambitious endeavor with the inauguration of the second phase of their supply chain finance (SCF) program in Vietnam. This phase of the initiative is strategically designed to enhance access to working capital for small and medium-sized enterprises (SMEs), empowering them with the financial resources necessary to thrive and contribute significantly to Vietnam’s economic landscape.
“Fostering Collaboration Among Singaporean and Hai Phong’s Small and Medium Enterprises.”
On May 17, the Vietnam-Singapore Friendship Association of Hai Phong City (VSFA Hai Phong) and Sing-Viet Impact Ventures (SVIV) joined hands in a Memorandum of Understanding (MoU) signing ceremony. This momentous occasion, held in Hai Phong city, marked a significant step forward in fostering a deeper connection between the two organizations and the nations they represent.
SVIV Aims to Expand Business Opportunities for Singaporean SMEs in Vietnam
On November 21, a significant meeting took place between Nguyen Duc Hung, the Vice Chairman and General Secretary of the Vietnam-Singapore Friendship Association (VSFA), and Joe Tan, the Executive Vice President of Sing-Viet Impact Ventures (SVIV), in Hanoi.
Gov’t continues legal assistance to SMEs
Prime Minister Nguyen Xuan Phuc has recently approved a legal assistance program for small-and medium-sized enterprises (SMEs) in the 2021-2025 period. The programme aims to promote awareness and sense of legal compliance and reduce legal risks and obstacles of SMEs that account for majority of the country’s total businesses.
