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ASMED is in the
process of developing an SME Development Plan for 2006-2010.
This includes removing constraints faced by SMEs, and creating
an enabling environment for the growth of SMEs. It is our aim
that by 2010 SMEs will generate up to 2.5 million new jobs each
year, and their competitiveness will be strengthened, so that
more will be able to directly export their products. To achieve
these objectives, we will propose a number of reforms in the
legal and policy framework for SMEs, including two major issues:
i) minimize the cost of business establishment and operations;
and ii) improve SMEs capabilities and competitiveness. Specific
proposals to change SME-related policies include: i) further
simplify the business registration procedures, by removing
unnecessary business sub-licenses; ii) review the current tax
lump-sum scheme for household businesses, which tends to
discourage them from formalizing their business activities; iii)
improve land planning by decentralizing the approval of SME-scaled
industrial zones projects, and establishing a network of land
management agencies under the amended Land Law; and iv) remove
ineffective regulations related to business bankruptcy, so that
the Law on Bankruptcy can genuinely come into effect.
Ms. Pham Thi Thanh Ha,
Division of General Issues and Domestic Investment
Encouragement,
Agency of Small and Medium Enterprise Development (ASMED)
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 Vietnam's
private sector has grown significantly over the last 10 years.
As an investor in private companies, we have met over 300
private Vietnamese companies over recent years. Based on our
experience, the typical private Vietnamese company has been
growing at an average of around 20% per year, with some
successful companies growing at significantly faster rates. We
have also seen that private companies are becoming increasingly
competitive against foreign-invested and state owned
enterprises. This progress is due significant reforms
implemented since the Doi Moi process began, as well as the
natural entrepreneurial skills and diligent work habits of the
Vietnamese people.
In spite of these positive developments, there remain some
significant constraints which, if solved, could facilitate
Vietnamese private companies in becoming an even more
significant part of the economy. For example, improvements to
Vietnam's capital markets, and the ability of private Vietnamese
companies to obtain financing from those capital markets, could
help to finance significant growth in the private sector,
particularly in the more capital intensive sectors. At Mekong
Capital, we strongly support the formation of a 5-year private
sector development plan, as this will create a clear set of
objectives which will allow a high level of coordination between
various government agencies, donor funded programs and the
private sector. We have found that whenever we invest into a
company, there must be a very clear common understanding of the
company's objectives, in order for everyone to work together for
changes to be successfully implemented. Likewise, the
establishment of a clear set of objectives for Vietnam's private
sector development over the coming five years will play a
significant role in facilitating all interested parties to work
together towards those common objectives.
Mr. Chris Freund, Managing Director, Mekong Capital Ltd.
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 Vietnam's
dynamic young firms need flexibility and regulatory space, not
overregulation or interference, to grow and adapt quickly to new
market opportunities. Good progress has been made over the last
few years in establishing the legislative framework for
business, and now the reform priorities should shift to
implementation of these new laws and to institutional reform. We
need a public sector that facilitates, not controls, the private
sector. It is time for public-private interactions, especially
in tax and customs, to be put on a more service-oriented and
transparent basis.
There is a tendency to over-regulate business activities in
Vietnam, which can smother the growth of small business.
Vietnam's young and dynamic private sector needs to spend its
energy on pursuing market opportunities, rather than using its
energy and time in attempting to follow (or evade) overly
complex regulations. Over-regulation may also lead to evasion
and informality, rather than compliance.
Policy-makers have a good opportunity to support firm dynamism
with the upcoming amendment of the Enterprise Law, and by making
this Law less prescriptive. Detailed rules about a firm's
structure and operations could to be covered in the Company
Charter, rather than putting these rigid details into the actual
Law, for example. A less prescriptive law would allow greater
flexibility, for Vietnam's small firms to comply, and also
simplify the role of enforcement.
Ms. Amanda Carlier, Private Sector Development Coordinator,
World Bank Vietnam
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 The
Government is strongly signaling the importance it attaches to
SME development by tasking the Ministry of Planning and
Investment to formulate the 2006-2010 SME Development Plan and
Action Plan as an integral part of the SEDP 2006-2010. In
addition, the Government has instructed all stakeholders to
assess past achievements and shortcomings as well as the steps
to be taken in the next five years with a view to improve the
quality of growth.
This is a welcome change in focus. What it simply means is that
stakeholders have to ask and respond to questions such as "what
can we export efficiently?" instead of questions such as "what
can we export?" Goals set at all levels have to be more about
improving productivity, understanding its determinants and
eliminating barriers to improvements, instead of simple
quantities to be achieved in various fields. In SME development
in Vietnam, this new focus could simply mean setting an overall
objective of achieving a significant increase in the
contribution of SMEs to national employment growth in the next
five years.
Focusing on improving the quality of growth, and hence,
productivity, as a fundamental objective does not rule out the
use of quantities in the planning and implementation of SME
development policies and priorities I find important for Vietnam
at this juncture. In my opinion and experience, anything that is
not measured does not have good chances of getting implemented.
Therefore, specific, realistic, time bound, cost effective and
most importantly, measurable indicators have to be set to
determine whether the overall and sub-objectives for SME
development have been achieved. These indicators would have to
be quantitative to be measurable, monitored regularly over time;
and would involve quantities such as the number of new jobs
created, number of new SMEs established, a specified increase in
the number of SMEs that are exporting in the period from 2006 to
2010, etc. Basically, what matters is not whether
quantities/numbers are used, but why and how they are used.
Ms. Nilgun F. Tas, Chief Technical Advisor, MPI-UNIDO SME
Project
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