HCM City (VNA)🌳 – The law on support to small- and medium-sized enterprises (SMEs), which is being drafted, is set to facilitate the development of the firms making up 97 percent of the businesses in Vietnam.

A three-day consultation on the draft was opened in Ho Chi Minh City on June 9. At a press conference as part of the event, Deputy Minister of Planning and Investment Dang Huy Dong said in many developed countries, it is normal to have SMEs accounting for more than 90 percent of the enterprises. In Japan , about 99.7 percent of local companies are SMEs, and they are working effectively and greatly contributing to local development. It is a must to improve the view about SMEs in Vietnam as they generate 40 percent of total GDP and create jobs for 52 percent of the workforce, he noted. He admitted that Vietnamese SMEs are facing an array of difficulties in loan, land and technology access and market expansion. That fact partly explains the private economic sector’s modest competitiveness and vulnerability to policy and social vagaries. The law drafting, supported by USAID Governance for Inclusive Growth Programme, aims to provide a comprehensive approach for SME support. Dong said under the draft law, there will be five SME support programmes that assist start-ups, give advice on production improvement, develop inter-sectoral connectivity and value chains, support innovation and help SMEs in integration. Some of the programmes will be applied for all SMEs while others will focus on the most potential firms. Other incentives include a 5 percent reduction in the corporate income tax for up to five years from an SME’s inception, along with preferential treatment during public procurement and in forming a distribution chain. In the draft, the Government also encourages commercial banks to give more loans to SMEs. Organisations and persons who provide support services for SMEs such as research institutes, universities and businesses will also receive certain benefits. Deputy Minister Dong said the incentives target high potential and creative companies. They are necessary and in conformity with international practice and commitments, especially free trade agreements like the Trans-Pacific Partnership and the EU-Vietnam FTA which will take effect soon.-VNA