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Incentives to help small business   2009-04-29 - VietNamNet/Viet Nam News

A series of proposed incentives for small - and medium-sized enterprises (SMEs), including the establishment of a support fund, is expected to help improve their competitiveness.

The fund would mobilise funds from both foreign and domestic financial sources to help SMEs create products that are competitive and environmentally friendly.

The new proposals are included in a draft decree that would replace the current Decree No 90/2001/ND-CP on SME development.

The fund would mobilise funds from both foreign and domestic financial sources to help SMEs create products that are competitive and environmentally friendly.

The money would also be used for equipment modernisation, application of advanced technologies and improvement of corporate management.

Under the draft, credit organisations would offer preferential loans for SMEs to carry out projects that are in prioritised fields and are in line with the fund's purpose.

According to the Ministry of Planning and Investment's Department of Enterprise Development (DED), the fund would conform with the general rules of many countries worldwide, and be in accordance with ASEAN-member countries' commitments to SME development.

Cao Sy Kiem, chairman of the Viet Nam Association of SMEs, said SMEs were often short of capital and needed assistance.

The fund would give significant support to SMEs, particularly when they meet financial difficulties, he said.

Kiem said capital sources for the fund should be raised from the state budget, agencies, associations and enterprises.

In addition to the establishment of the SME Support Fund, the draft also assigns the Ministry of Finance to set up a new mechanism to increase the effectiveness of the current credit guarantee funds for SMEs, which were set up in 2001 under Decree No. 90/2001/ND-CP.

The credit guarantee funds have been set up to help SMEs, which pledge to borrow capital from credit institutions or fail to purchase enough mortgaged properties.

The SME support fund and the credit guarantee funds for SMEs would make important contributions to helping SMEs improve their financial potentials.

Besides such financial support, the draft also includes many regulations that are expected to create opportunities for SMEs to find land to develop production activities.

Also under the draft, the Government, ministries, branches and people's committees are encouraged to give SMEs a certain number of contracts and orders related to the supply of public services and commodities.

According to the decree drafting board, this policy will not only create opportunities for SMEs to further expand their business but also show the public sector's confidence in the private sector.

The regulation would confirm the Government's policy to help the private sector participate in public works, with the aim of generating more jobs and contributing to social stability, said DED head Nguyen Van Trung.

The country has more than 300,000 companies, with SMEs accounting for 94 per cent.

Among SMEs, companies that have capital of less than VND1 billion (US$60,000) account for 42 per cent, and those that have less than VND10 billion (US$606,000) make up 13 per cent.

The sector employs more than half of the country's workers and contributes 30 per cent of the national GDP.

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