And they were expected to total 500,000 by 2010,he told representatives of the country’s SME’s, who attended a conference titled, Enterprise Development 2007-2010 held by the Government Office, Ha Noi.

The Deputy Prime Minister said the magic growth of SMEs in both number and quality was highly appreciated.

The growth of their registered capital had also been remarkable.

But the commercial environment was now different and both the State and SMEs had to improve their capacity to conquer first the domestic market then international markets.

Major challenges included raising capital, workspace, competitiveness, development of labour and the global integration of business.

The conference gave the SME representative the chance to list their difficulties, challenges and proposals to the Deputy Prime Minister.

Finance Ministry officials told the conference that SMEs faced many difficulties in borrowing from financial institutions.

Only 48.65 per cent of enterprises had been able to raise loans, 30.43 per cent reported that it was very difficult to obtain loans and 20.92 per cent said they were not able to access bank capital.

SMEs could not mobilise much capital from the stock market as they usually did not meet all the requirements of listing.

Other sources such as Foreign Direct Investment; the issuing of corporate bonds and financial leasing were also not readily available.

Shaky business

The difficulties meant that many enterprises had to borrow from their employees; illegally appropriate the capital of other enterprises or avoid paying tax.

All this made for shaky business.

The Finance Ministry officials also suggested:

Quickening the establishment of provincial credit underwriting funds and the perfection of existing funds by provincial authorities as a way of benefiting SMEs;

Renewing export, investment and development credit;

Allowing more institutions to list on the stock market and simplify the administrative procedures for them to do so;

Hastening of equitisation of State-owned enterprises to make them more profitable while creating an equal business environment among different economic sectors; and

Introducing a mechanism to make development of SMEs a priority.

The Finance Ministry’s proposal were supported by many attending conference.

Viet Nam Small to Medium Enterprise Association chairman Cao Si Kiem said: "If we could eliminate the financial constraints to enterprises they would have the chance to do many good things."

The Government should map a long-term strategy and a national education programme for SMEs, he said.

The Education Ministry and SMEs should work together to identify the requirements of labour so as to improve the poor management of most enterprises.

"We are using generally obsolete technology with poor management and administration and unskilled employees.

"If we don’t co-operate to improve, we will have to pay dear when Viet Nam fully implements its WTO commitments."

Banks to help

The conference was told that the State Bank of Viet Nam would map a plan to help enterprises raise capital from commercial banks.

The central bank would also help in training SME personnel in the skills needed.

A draft of the plan was expected to go to the Prime Minister before the end of June next year.

SME representatives told the conference that improved procedures for business registration, tax procedures and customer services needed urgent attention.

They were anticipating legal reform to eliminate the difficulties.

Planning and Investment Ministry figures made available at the conference showed that 22.9 per cent of SMEs devoted 10 per cent of working time to administrative procedures.

Viet Nam Commercial and Industrial Chamber, VCCI, representatives told the conference that infrastructure would have to be improved and extended to help SMEs.

Only 65.96 per cent of SMEs were satisfied with the transport system; 82.41 per cent approved the telecommunication services and 61.02 per cent agreed that their local infrastructure policy was satisfactory.

Planning and Investment Ministry figures showed that 53 per cent of SMEs do not have sufficient space for business and were confined to living or small rented areas.

Sixty 5 per cent of SMEs said they would expand production if they had more room.

VCCI chairman Vu Tien Loc complained about the creation of unnecessary "baby" business licences by various ministries and agencies.

The Government Office representatives said that they were preparing draft of master plan for enterprises toward 2010 that would instruct all ministries and relevant agencies to continually review administrative procedures so as to eliminated unnecessary documents.

The Planning and Investment Ministry will with other ministries and agencies establish a "one-stop" mechanism for enterprise registration in the first three months of next year.

Source: VietnamNews.