Vietnam to set up fund to help small- to medium-sized businesses

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Vietnam is planning to set up a fund to support small- to medium-sized firms, following reports saying such businesses are suffering from inadequate access to loans and a deteriorating business environment.

The establishment of Fund for the Development of Small- and Medium-sized Enterprises (SMEs) was proposed by the Enterprise Development Agency under the Ministry of Planning and Investment.

The organization will receive VND2 trillion (US$96 million) in funds from the national budget over three years, reported on November 23.

VND500 billion will be allocated in each of the first two years and the rest will be provided the following year.

In the future, the fund's inflows are expected to come from international and domestic institutions, mainly the Asian Development Bank and the World Bank, the news website quoted the Ministry of Planning and Investment as saying.

Any companies seeking loans from the fund must fulfill a prerequisite of having at least 20 percent of the total investment needed for intended projects or production, according to the report.

The loans will max out at VND30 billion and must be due in seven years. Companies with long-term projects can apply for extensions, but all loans must be repaid within 10 years.     

Bui Thi Thu Thuy of the Ministry of Planning and Investment said on November 23 that the current policies aimed at supporting Vietnamese SMEs are limited and hard to access.

The establishment of the fund is part of the country's plan to develop the SMEs for 2011-2015.

The country expects the number of SMEs operating will be 600,000 by the end of 2015 with 350,000 new ones set up in 2011-2015, when SMEs are expected contribute up 40 percent of Vietnam's total GDP, according to a Vietnam News Agency report in September. 

This year Vietnam slipped 16 spots to 40th of 185 economies in its ease of getting credit ranking, according to "Doing Business," a study published by the International Finance Corporation and the World Bank in October. Last year, the country was also dropped nine positions from its 15th place position in 2010.

The World Bank's report also showed Vietnam is becoming less business friendly, despite the country's efforts to make a starting new businesses easier. According to the report, Vietnam ranked 99th among 185 economies this year, following an eight-position drop last year.

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