Workers process metal components at a local firm. SMEs involved in support industries for electronics and mechanics can apply for funding of the planning and investment ministry this year. — Photo kinhtedautu.vn

HA NOI (Biz Hub) — A Ministry of Planning and Investment fund will finance small- and medium-sized enterprises (SMEs) with a total amount of VND660 billion (US$29.3 million) this year, an official said.

Hoang Thi Hong, director of the SME Development Fund, told reporters that the funding is reserved for enterprises nvolved in innovative and creative activities, and those contributing to chains of production, processing and maintenance of agricultural, aquaculture and forestry products.

Companies involved in support industries for electronics, mechanics and sewage treatment, can also apply for funding.

Firms can borrow between VND10 billion and VND25 billion for 18-24 months and a preferential interest rate of 5 per cent per year.

This is reportedly the first time the SME Development Fund lends money to enterprises since it was established in 2013 by a Government decision, with a charter capital of VND2 trillion.

The fund mandated the Bank for Foreign Trade of Viet Nam, Bank for Investment and Development of Việt Nam, and Housing Development Bank to disburse the loans.

Official data indicates Viet Nam has about 500,000 operating enterprises, of which SMEs account for 97 per cent.

SMEs contribute some 46 per cent to the national gross domestic product (GDP) and 31 per cent of all tax revenues, while employing 60 per cent of the country's workforce of more than 52.2 million people.

Demand for new investments, business expansion and start-ups is great. However, the majority of SMEs face difficulties in accessing loans as they cannot afford high interest rates and fail to meet the lending conditions of commercial banks, said Hong.

"In fact, organisations such as the World Bank, Asian Development Bank and Japan Bank for International Cooperation have many capital support programmes for enterprises. But it is not easy for companies to approach these capital sources," said Dao Thi Kim Ngan, chairwoman of the SMEs association of nothern Hai Phong City.

Ngan told Dien dan Doanh nghiep (The Business Forum) that the VND660 billion preferential package is too small compared with enterprises' demand for capital, suggesting business associations should establish more funds to better assist businesses.

Industry insiders said Viet Nam's SME support activities have mainly concentrated on helping struggling firms, while programmes that promote sustained business development remaining few. — VNS