Nguyen Van Than, chairman of the Vietnam Association of Small and Medium Enterprises, talks about the difficulties that small firms in Vietnam are facing including a turbulent market and challenging institutions.
Nguyen Van Than, chairman of the Vietnam Association of Small and Medium Enterprises
Talking about the upcoming Vietnam Association of Small and Medium Enterprises' 3rd national conference on December 3, the association president Nguyen Van Than said that world economic downturn was still affecting local business and had caused many firms to shut down.
Local firms are facing tough competition. What do you think about both the number of firms and the quality of the development process?
97% of Vietnamese firms are small and medium-sized. They contribute 43.2% to the GDP and have created jobs for 62% of Vietnam's workers. They grow fast but they didn't focus on quality in order to cope with market changes.
They are very vulnerable because of problems with scale, capital, technology and unskilled human resources. In the first quarter, 23,000 small and medium-sized firms dissolved or shutdown. In addition, the institutions are also causing them difficulties.
But the government have offered supports such as the establishment of Small and Medium Enterprise Development Fund and your association is also proposing new mechanisms to help the firms?
It's true that there are many programmes and policies to help firms have been developed. But the implementation of many of those programmes and policies have been slow or inefficient, take the policies to help firms access development funds or credit guarantee fund as examples.
The National Assembly has just had a discussion about the draft bill to support small and medium-sized firms. What is your expectation from it?
It will create more favourable conditions for firms to develop. For example it states that small and medium-sized firms will be given priority to bid for VND3bn (USD136,000) or smaller projects. Small packages are given to small firms in Japan, South Korea and the US. VND3bn is also a reasonable number.
There are also opinions that the government and officials are helping firms as long as they don't harass them. Do you agree with it?
Administrative procedures have been a problem for small firms. They need to be reformed so small firms can have more development opportunities. Access to bank loans, problems about collateral and bad debts need to be addressed quickly. In fact, they should be legalised to ensure fair competition with bigger firms.
Previously, you said that small firms are becoming tiny. What do you think we need to do to help them expand?
There are people saying that Vietnamese firms don't want to grow. There are reasons for this and the first is the institutions and policies like I said. Additional expenses and bribery are not something every firm can cope with.
The most important thing is firms have to create closer links with each other.
In the globalisation process, we have to think about the connection with foreign firms in order to boost technology and advanced business administration. During this process, competition will get really tough and incapable firms will be wiped out, but that's unavoidable if they want to grow.
