(VEN) - A seminar on providing suggestions for improving a draft plan for the development of small to medium-sized enterprises (SMEs) from 2011-2015 recently took place in Hanoi. At the seminar, the Business Development Department of the Ministry of Planning and Investment introduced the targets laid out in the draft plan. They include the establishment of an additional 450,000 SMEs, 10 percent of all SMEs to be involved in direct export activities, SME investment to account for 40 percent of the total investment capital, and SMEs to make a 30 percent contribution to the country's gross domestic product (GDP) and a 35 percent contribution to the state budget revenue and to create four million more jobs.
The draft plan introduced eight groups of solutions to reach these targets, including the improvement of the legal framework governing business entrance, operation on and withdrawal from a market; assistance in accessing finance and credit; assistance for adoption and renovation of advanced technologies in SMEs; workforce development (priority to be given to administrative capacity); promotion of the formation of industrial complexes for SMEs; information provision and information expansion promotion; construction of SME development strategy; and management of SME development planning.
To Hoai Nam, General Secretary of the Vietnam Association of Small and Medium Enterprises said the draft plan had concrete targets but the methodology to achieve such results needed to be revised. He suggested that solutions related to individual households be pinpointed so they can transform into businesses and that appropriate policies related to acquisitions and mergers should be formulated. This would help improve business capabilities, create more jobs for rural people and increase the number of export businesses (75 percent of all export businesses in Vietnam are medium-sized companies).
Referring to the target of 10 percent of all SMEs to be involved in direct export activities from 2011-2015, Nguyen Hoang Minh, the deputy director of the Ho Chi Minh City Department of Planning and Investment said that the target should be reconsidered because the rice sector had a plan for decreasing the number of central rice exporters. He believed that the target of creating an addition 450,000 SMEs between 2011 and 2015 was infeasible saying that there was evidence that many new start-ups weren't capable of continuing. Only two thirds of all SMEs in Ho Chi Minh City run well, while the remaining one third are operating less effectively, he said. It is necessary to improve regulations on businesses' withdrawal from a market. The improvement will make it easier for ineffective businesses to withdraw from the market when they are no longer capable of operating.
A representative from the Vietnam Chamber of Commerce and Industry (VCCI) said that solutions for promoting the formation of industrial complexes for SMEs did not reflect existing Ministry of Planning and Investment policies on limiting the establishment of industrial zones and complexes. The VCCI representative also questioned how financial and technological assistance programs could be funded.
A World Bank representative said the draft plan revealed that some rather good starting points had been defined but the plan was overly focused on quantitative not qualitative targets. The representative suggested that the draft board made it possible for the private sector to play a bigger part in providing suggestions for the plan so it could absorb more practical measures that reflected the interests of the sector.
Mimi Groenbech from the International Labor Organization (ILO) noted that the draft plan needed a stronger emphasis on the role of associations and that it needs to include policies for SMEs so they could know where they could receive financial and credit assistance and be assisted in other areas.
"We should not be overly concerned by the target number of 450,000 new SMEs being founded from 2011-2015 because a large number of businesses have opened but many of them had to close. Perhaps we've made it too easy to establish businesses just to reach a target. It is important to learn why businesses have to close and let relevant authorities act as doctors to treat those businesses, and assist businesses construct appropriate business strategies or tell them where they can go to have their problems addressed," said Mimi Groenbech./.
Source: Vietnam Economic News
