15:18 | 05/09/2016 Economy
(VEN) - In recent years, small and medium enterprises (SMEs) have received much support from the government. However, in order to help SMEs to develop sustainably, it is necessary to have more effective policies.
Small and medium enterprises (SMEs) need support to develop
Facilitating SMEs with an easy access to capital
Vice Chairman and Secretary General of the Vietnam Association of Small and Medium Enterprises (Vinasme) To Hoai Nam said compared with June 2015, the proportion of SMEs inaccessible to credit funds has decreased by 10 percent, from 40 to 30 percent. However, SMEs’ difficulties in accessing the capital remain one of the major obstacles today. “The 30 percent remainder is almost inaccessible to bank credit,” he stressed.
A Vinasme’s survey revealed that about one third of the 30 percent remainder are facing problems arising from separate regulations of credit institutions and the provisions of management bodies related to financial standards that banks and credit institutions must comply.
Jinchang Lai, Principal Operations Officer and Lead for Financial Infrastructure, Finance and Markets, East Asia and Pacific, International Finance Corporation, said capital accessing difficulties result from the fact that Vietnam has failed to develop a market for assets (such as corporate rights to future revenues, payouts from insurance contracts, securities, bonds and intellectual property) to make collateral instead of real estate. Meanwhile, about 80 percent of corporate loans worldwide are involved with corporate assets.
To solve the problem, related ministries and agencies focus on a legal system that allows enterprises to make collateral of their assets for loans, on the establishment of an effective and transparent corporate information system to help credit institutions avoid credit risks while helping SMEs more easily access capital in the form of credit rather than mortgage, Jinchang Lai suggested.
Tax preferences in need
According to Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE) Prof. Nguyen Mai, Along with narrowing the gap between banks and enterprises, it is necessary to review tax policies towards encouraging enterprises; i.e the government should promulgate more preferential tax policies in relation to corporate income, personal income, costs, prices and profits for at least five years.
According to Resolution 35/NQ-CP on corporate support and development until 2020, if reducing just 50 percent of personal income tax for those who work in a certain number of areas, SMEs will not have a chance to benefit from this policy, because the majority of workers in these businesses receive lower incomes than taxable levels. In addition, a 15-17 percent reduction in corporate income tax for SMEs is all the same, because only profitable SMEs would benefit, Nguyen Mai said.
In addition to decreased contributions to the budget, it is needed to have tax policy packages for a number of large-scale investment projects made in investment-encouraged industries and sectors. This would stimulate people to bravely start up business, and the government would therefore increase annual budget revenues, Nguyen Mai suggested.
The Ministry of Finance recently proposed reducing the corporate income tax for SMEs from 20 percent at present to 17 percent during the period from January 1, 2017 to December 31, 2020.