With such a large contribution, however, these firms still face many challenges in terms of access to credit and loans. To this end, the newly approved law supporting small- and medium-sized enterprises approved by the National Assembly could create better access to firms.
The Law on Supporting Small and Medium-sized Enterprises stipulates that the government will assist SMEs in accessing credit, tax and accounting support, production sites, market expansion, legal advice and human resources development. Access to finance is a focus, evidently through the expansion of the Small and Medium Enterprise Development Fund. This year, the fund aims to provide loans worth US$24.8 million at a 7% per annum interest rate for the entire loan period.
Despite the Small and Medium-Enterprise Development Fund being established nearly four years ago, only three companies have received finance from this fund. This firm was launched in 2013 operating in the high-tech sector - a priority field for loans, but the firm has given up on applying for loans from the fund.
The biggest challenge for SMEs is that they do not have collateral such as real estate or machinery to apply for loans from commercial banks. To this end, banks have switched to new approaches to help businesses gain easy access to loans.
Credit support for small and medium-sized enterprises will continue to be revised in order to meet the target of 1 million enterprises by 2020. The Small and Medium Enterprise Support Law will take effect from the start of next year. This is considered a foundation for the development of SMEs in the future.
