Download Viet Nam - APEC SME Innovation Center

Ministry of Planning and Investment (MPI)
Enterprise Development Agency (ASMED)
Policies to Strengthen
Viet Nam’s SME capacity in
the Global Economic Crisis
Pham Thi Hong Trang (MS)
International Cooperation Official
Seoul, 8/2009
Content
1.
2.
3.
4.
Overview on Viet Nam’s economy
SME in Viet Nam
Major Problems
Government Policies
1.
2.
3.
4.
Overview on Viet Nam’s economy
SME in Viet Nam
Major Problems
Government Policies
Viet Nam
Viet Nam is located in the Eastern part of the Indochina
peninsula, bordering China to the North, Laos and
Cambodia
to the West with a long land border of 4,550 km, and
facing the
Eastern Sea (South China Sea) and the Pacific to the East
and
the South
Climate: Vietnam lies in the tropics and monsoon
Topography: Three quarters of Vietnam's territory consist
of
mountains and hills
Administrative Units: Vietnam is divided into 63 provinces
and cities.
Population: about 86,5 million people (Density 260 ppl per
square kilometer.
Language: Vietnamese. Capital: HA NOI. Currency: DONG
Overview on Vietnam economy
Compare to the first quarter 2008
•
•
•
•
Industrial output increase 2.4%.
Agricultural output increase 0.9%;
Total sale in service sector increase 21.9%;
GDP in 1st quarter 2009 is 3.1%
(compared to 7.4% in 2008)
Overview on Vietnam economy
Compare to the first quarter 2008
•
•
•
•
Export turnover is US $4.7 billion, decrease by
15% compare to the first quarter 2008.
Import turnover is $4.3b, decrease by 45%
compare to 2008;
Total committed ODA capital is US$26.23m;
Total newly FDI registered capital is $1.2m,
equivalent 30% the same period in the previous
year;
Overview on Vietnam’s economy
Main figures
1
2
GDP (%)
The first 6
The first 6
months in 2008 months in 2009
6.5
3.9
Agriculture, Forestry, Fishery Sector (%)
3.04
1.25
Industry and Construction Sector (%)
7.00
3.48
Service Sector (%)
7.60
5.5
Industrial output (%)
16.5
4.8
4.5
2.5
Agricultural output (%)
3
Export turnover ( billion US$)
29.7
27.6
4
Import turnover ( billion US$)
44.5
29.7
Overview on Vietnam economy
Main figures
5 Total committed ODA capital
(million US$)
6 Total newly FDI registered capital
(billion US$)
7 Number of newly registered
enterprise
Total newly registered capital
(billion VND)
The first 6
months in
2008
The first 6
months in
2009
1783.00
1539.00
16.2
4.7
35,047
41,100
291,743
170,000
1.
2.
3.
4.
Overview on Viet Nam’s economy
SME in Viet Nam
Major Problems
Government Policies
New SME Definition
Decree 56/2009/ND-CP on Supporting for the development of small and
medium-sized enterprise
Sector
Super small
enterprise
The number
of
employees
I. Agriculture,
forestry and
aquaculture
II. Industry and
Construction
III. Trade and
Service
Small enterprise
Medium-sized enterprise
The number
of
employees
Total capital
The number of
employees
<10
< 20
Billion
VND
< 200
< 100
billion
<300
<10
< 20
Billion
VND
< 200
< 100
billion
<300
<10
< 20
Billion
VND
< 50
< 50 billion
<100
Total
capital
Overview on SME in Viet Nam
•
Total number of registered SME: around
41,100
•
SME present around 97% of total enterprises
•
SME create around 3 million jobs, account for
40% GDP and 29% export value with growth
rate of 18%/year
•
Registration is steadily rising since
simplification of procedures and introduction
of new laws
Number of Enterprise by Legal Form
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2002
2003
2004
SOEs
Non-State
2005
FIEs
2006
1.
2.
3.
4.
Overview on Viet Nam’s economy
SME in Viet Nam
Major Problems
Government Policies
Major problems with SME
•
•
•
•
Lack of recognition of the great impact of
globalization, the international and regional
integration process
Have a small scale, have limited capital, a small
number of employees.
Lack of information on input markets.
Limitation in market access; the quantity of
products manufactured by SME is small in scale,
mainly for domestic use, and even for very small
local areas.
Major problems with SME
•
•
•
•
Weaknesses in science and technology capacity
and unskilled workers
Constraints in relation to linkages between
business and production units
Unprofessional Internal management of SME
Lack of transparency in financial management
Technology Capability of SME
Most SME use technology in 1980s
Limited capability in technology research and innovation
Only 0.1% annual turnover is used for technology
innovation (GTZ survey on 1200 enterprises
80% SME have no strategy to invest in science and
technology
SME technology capability
Most SME use backward technology, 3-4 generation
compared to average level of the world
R&D activities
•
•
•
Less than 5% SME implement R&D activities.
There is no enterprise in insurance and ICT
sector implement R&D
Technology innovation happen most often in
garment and automobile sector
(VCCI survey in 2006 in 8 sectors: Garment and textile, automotive,
insurance, banking, ICT, sea transportation, fishery, electronic)
Capability in technology research
and innovation
•
•
1% total cost used for R&D and 0.2%
for technology innovation in all sectors
Almost enterprise has no strategy and
budget for this activities
Innovation rates
(SME survey 2007 by CIEM, DOE, ILISSA)
70
61.8
60
50
44.1
40.8
Introduce new
product
Improved existing
product
40
30
20
10
4.9
0
2005
2007
Technology characteristics
Level
technology
2007
10.3
7.7
Manually operated machinery only
3.5
5.0
Power driven machinery only
24.6
27.5
All of the above
61.6
59.8
Under 3 years old
22.9
22.0
Between 3 and 5 years old
34.9
36.5
Between 6 to 10 years old
30.4
27.5
Between 11-20 years old
9.5
12.5
More than 20 years old
2.3
1.5
61.1
71.1
34.1
4.8
24.4
3.9
of Only hand tools only
Age of technology
New or
hand
2005
second New
Used
Self-constructed
Demand for techno innovation by SME
New investment
%
enterprise
has
investment 2005-2007
2005
made
2007
% financed by own
capital/retained earnings
2005
2007
All
62.2
42.2
66.9
74.0
Micro
55.5
34.2
67.3
77.9
Small
72.4
56.3
69.3
71.8
Medium
76.7
69.4
57.1
61.2
Urban
56.5
38.6
72.1
70.1
Rural
66.6
45.2
64.0
76.5
Demand for techno innovation by SME
Investment purpose
60
50
40
30
20
10
0
Add to
capacity
Replace old
Improve
equipment productivity
Improve
quality of
output
Produce new
output
Safety
EnviromentalOther purpuse
requirements
Reasons for the inability of SME to access to
technology
Lack of access
to technological
information and
consultancy
services
Poor financial
situations and
low levels of
R&D
The inability
of SME to
access to
technology
Lack of
management
skills
Poor
adaptability to
changing
trade trends
Desire to avoid risk
Non
availability of
technical
human
resources
Major Problems





Export market narrowed down and Export price
decreased
Factory closing
Unemployment increase
Example: Fishery export turnover
by 10.7%
Footwear sector
8.7%
Tex and Garment
1.3%
Domestic market suffered from input cost.
Q1 of 2009: 65,000 laborers lost jobs, 39,000 laborers partially
unemployed, 3,000 laborers abroad returned home early
Difficulty in accessing to supportive financial resources.
Security Market go down and interest rate go up
Difficulty in mobilizing capital.
Real Estate Market is freezing
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2.
3.
4.
Overview on Viet Nam’s economy
SME in Viet Nam
Major Problems
Government Policies
1. Urgent measures to be taken - Government
Resolution No. 30/2009/NQ-CP: financial incentives
SME can get the following benefits:



30% CIT payable deduction for 2009.
The remaining 70% CIT payable: 9 months extension for the
deadline of submission of the tax payables for selected SME.
For exporting enterprises: a refund of 90% input VAT. Obtaining
the remaining 10% of VAT input refund once the payment
documents are justified.
2. Government's stimulus packages



The first stimulus package: short-term
lending (Prime Minister’s Decision 131): 4%
interest rate subsidy
The second stimulus package: long-term
lending (PM’s Decision 443): 4% interest rate
subsidy
For agricultural and rural development (PM’s
Decision 497): interest-free lending for
agricultural machineries, 4% interest rate for
agricultural inputs and materials
3. Government eases conditions for credit guarantee


Businesses from all sectors that have charter
capital of a maximum of VND20 billion
(US$1.13 million), or employ less than 500
workers, are eligible for credit guarantees.
Credit guarantee does not apply to
consultancy, real estate, securities, services, or
for loans to pay debt, but does apply to lowincome and student housing projects or to
build cemeteries
Short term measures to help
SME over crisis
•
•
•
Credit guarantee program for enterprise:
575 billion VND
4% interest rate subsidy program: 85
banks participate; 178.722 billion VND is
disbursed;
Subsidy interest rate for export lending is
2.9%;
Short term measures
Tax policies
•
•
•
•
To issue policies on tax delay, reduction and
exemption (PIT, CIT and VAT);
CIT: To reduce by 30% on CIT for SME.
Reduction of 9,900 billion VND in state budget,
6,800 billion dong delay to 2010;
VAT: 50% reduction in VAT for some goods
(1,050 billion dong), reduction in state revenue
of 1000 billion dong; delay up to 180 days for
import goods;
PIT: Delay in tax revenue is 1,600 billion (1st
quarter 2009)
Long term strategy
New Government’s Decree
56/2009/ND-CP on supporting for
SME development
1.
2.
3.
New SME Definition
SME Development Plan
Support Policies
GOVERNMENT DECREE
On Supporting for the development of SME
Scope of regulation:
Prescribes the support policies and state
management on supporting SME development.

Subject:
Apply to SME, SME Support Organizations and State
Management Bodies on SME development.

New SME Definition
Decree 56/2009/ND-CP on Supporting for the development of small and medium-sized enterprise
Sector
Super small
enterprise
The number
of
employees
I. Agriculture,
forestry and
aquaculture
II. Industry and
Construction
III. Trade and
Service
Small enterprise
Total capital
The number
of
employees
Medium-sized enterprise
Total capital
The number of
employees
<10
< 20
Billion
VND
< 200
< 100
billion
<300
<10
< 20
Billion
VND
< 200
< 100
billion
<300
<10
< 20
Billion
VND
< 50
< 50
billion
<100
Planning for SME Development
Ministries, Provinces,
Organizations
SME development plan
5-year Plan
Annual Plan
Overall 5 year
Socio-Economic Development Plan
The State management body in SME
development in localities
MPI/ASMED
Relevant Departments, Organizations
Annual Report on SME development
DPI
People’s Committees
Development Orientation
SME Development Policies and legal documents formulation
Supportive programs consolidations
Plan
Information
Supportive Programs Coordination, Guide and Examination
SME
GOVERNMENT DECREE
On supporting for the development of SME
30/6/2009, Prime Minister issued Decree 56/2009/ND-CP and will be
implemented on 20th August, 2009”
•
New definition of SME
•
Supportive policies are in more detail
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•
•
Enhance the role of Enterprise Development Agency (ASMED): ASMED shall
assist the Minister of Planning and Investment in performing the function of state
management over SME development.
The State management body in SME development in localities: Department
of Planning and Investment (DPI) to be the focal point in formulating the
development programs and plans for SME.
SME development support plan: must be incorporated into the annual plan and
5-year plan of Ministries, agencies, localities, national economy plan with budget and
solutions for implementation
Domestic SME policy trends
and initiatives
•
•
•
•
•
Facilitating SME’s access to finance
SME accounting regime
Human resource training support for SME
Technical and technological assistance
Promoting market expansion
Domestic SME policy trends
and initiatives
•
•
•
•
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Supporting local industry development
Supporting SME’s access to information
Building up SME promotion institutional
infrastructure
Implementation of the SME Development
Plan 2006 -2010
ODA attraction: ODA commit capital for
2009 – 2010 is expected US$8-10 billion
Thank you very much
Contact:
Enterprise Development Agency
Ministry of Planning and Investment
No 6B, Hoang Dieu Street, Hanoi, Viet Nam.
Tel: +84 80 4 3231
Fax: +84 43 734 2189