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SMEs vital for economy, but short of cash
Small and medium-sized enterprises throughout the country contributed significantly to the nation's economic growth, but still face challenges, according to the Viet Nam Chamber of Commerce and Industry (VCCI).
During 2000-2005, SMEs and non-State enterprises posted the highest growth as a result of Government policies encouraging the establishment of private enterprises.
In 2005, SMEs contributed 53 per cent of the country's gross domestic product (GDP). Their industrial value grew from 24.6 per cent of the country's, total industrial value in 2000 to 37 per cent in 2005.
The development of social welfare has also benefited from SMEs, which have given people several hundreds of thousands of jobs in the past few years. Up to 90 per cent of new jobs in the country in the last five years are the result of SMEs.
With a large workforce for industrial production and business, SMEs also promoted hunger eradication and poverty reduction programmes and narrowed the development gap between different parts of the country.
Small scale
In the first four months of this year, 6,400 SMEs were established with a legal capital of VND90 trillion (US$5 billion), nearly half of the total capital for the whole year of 2007. Vietnam now has about 300,000 businesses, 95 per cent of which are SMEs.
Despite a boom in SMEs, most still operate on a small scale. Those with capital less than VND1 billion (US$62,000) account for 41.8 per cent of the total number of SMEs.
At the beginning of the year, most SMEs faced capital shortages due the State credit tightening policy.
According to HCM City's Business Association, up to 70 per cent of SMEs lacked the requisite capital to boost production.
Other challenges include shaky access to bank loans, a shortage of floor space for production and business, tax policies, and a lack of marketing strategies and qualified business managers.
A recent survey by the Ministry of Planning and Investment on 63,000 SMEs nationwide showed that 43 per cent of SME owners do not have a college degree.
Low educational backgrounds are thought to be hindering access to advanced technology and the use of updated business strategies to improve industrial productivity and quality and raise competitiveness in the global market.
A largely untrained workforce also poses a problem. Over 60 per cent of SMEs failed to recruit qualified staff and 55 per cent had difficulties in keeping qualified employees.
Counting on them to continue develop the economy, the Government plans to foster a more SME-friendly environment. According to the VCCI, a master development plan and leading agency are needed to promote production.
VNN
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